Oral Answers to Questions

EDUCATION AND SKILLS

The Secretary of State was asked—

Students

John Barrett: How many Scottish-domiciled students have enrolled at (a) English and (b) Welsh universities since September 1999.

Alan Johnson: The latest information available for 2001–02 shows that there were 26,456 Scottish-domiciled student enrolments at English higher education institutions and 672 at Welsh HEIs. In 1999, there were 24,305 such students at English HEIs and 518 at Welsh HEIs.

John Barrett: Will not Scottish students have to pay up to £3,000 in up-front fees while their English colleagues will be able to defer those fees until after graduation? Will not the introduction of those fees increase the barriers to widening access to university education in England, whereas those barriers have been reduced in Scotland, with more than 53 per cent. of 18-year-olds now accessing university?

Alan Johnson: Under devolution, the Scottish Executive rightly decide what happens in Scotland. It is important to realise that the figures have remained constant since not just 1999 but 1997. There has been no reduction in the number of Scottish students looking to study in England since the introduction of fees. Indeed, in Scotland, Scottish students pay £2,000 into the graduate endowment scheme; that situation will continue unless it is changed by the Scottish Executive.

Huw Edwards: Does my right hon. Friend agree that more Scottish students would be attracted to study in Wales if the Welsh Assembly could implement its Labour party manifesto policy of six months ago not to have top-up fees? Has my right hon. Friend discussed that with Jane Davidson, the Welsh Minister for Education and Lifelong Learning? If the Welsh Assembly can avoid top-up fees, will the Government consider applying that policy in England, too?

Alan Johnson: As supporters of devolution, we keep in constant touch with my opposite number in the Welsh Assembly, Jane Davidson, and with the Scottish Executive. The maintenance grant that is to be introduced next year will apply to Wales as well as England. I understand that the Welsh Assembly has ruled out introducing variable fees until 2007, when it will reconsider the issue through the Rees commission. That is entirely appropriate. Until then, Welsh students will continue to pay the £1,125 up-front fee.

Adam Price: If I understood the Minister's response correctly, it will be up to the devolved Administrations to decide whether they want to offer those of their students who are studying in England the option of deferment by providing them with a loan. Will they have to find that money from within their existing budgets, or will additional moneys be made available to enable them to offer that option?

Alan Johnson: They would have to find it from within their existing budgets. The other important point to mention is that the Bill that is to be introduced fully devolves the issue of student support to the Welsh Assembly. We are happy to do that in the spirit of devolution, but I understand that Plaid Cymru opposes it.

Tuition Fees

David Chaytor: What assessment he has made of the differences between flat-rate and variable university tuition fees, with particular reference to the equity of each.

Charles Clarke: Our assessment is that a flat-rate fees system would be more unfair than a variable fees system. It would force every university to charge the same amount across the board, irrespective of the demand, nature or quality of the course, or the potential rate of return for the student, thus removing the flexibility to target foundation degrees or degrees in subjects such as physics or other sciences. It would lead to course closures, institutions having no flexibility in deciding what to do, and lower quality. It would mean that we would be unable to influence access through the regulator, as we propose. Finally, it would lead to redistribution from poorer to more affluent students.

David Chaytor: I thank my right hon. Friend for that reply. Is not it the case that the majority of students in the United Kingdom have always been eligible for variable fees because most of them are not full-time undergraduates? If he were vice-chancellor of a smaller, post-1992 university, at what amount would he be inclined to set the fee?

Charles Clarke: My hon. Friend's first point is correct. The undergraduate fee is unique when compared with other fees, because of the current regulation. If I were in the enviable circumstance that my hon. Friend described, I would set a range of fees for different courses in the university of which I was vice-chancellor, taking account of the demand, the nature of the course and the sort of encouragement that I wished to offer to get students for specific subjects. I would not set a fee for the whole university but would consider each course separately.

Tim Yeo: Yesterday, the Secretary of State claimed that a university that charged a zero fee would encourage students to study there, thus admitting that universities that charge a full fee would discourage students from studying there. The Institute for Fiscal Studies has shown that fees at the level that the Government propose would raise only a fraction of the money that they need to implement their policy. How high does he expect the fee to rise—to £4,000 or £5,000 a year? Whatever the level, is not it true that the Government's policy means that access to university will be on the basis of ability to pay, not academic merit?

Charles Clarke: First, although I have not had an opportunity to consider in detail the Institute for Fiscal Studies report, which the Evening Standard commissioned, I have been briefed on it and it is based on a set of tendentious assumptions both about the fees to be charged and the Government's policies. Secondly, we have been clear that, until at least the end of the next Parliament, there will be a maximum cap on all fees of £3,000 in real terms. The talk of £4,000 or £5,000 is not relevant. I have never hidden the fact that the fee will be a factor in a student's choice of course—that is obvious. However, it is only one among a range of factors, which include the rate of return from specific courses, the academic tradition and whether students want to study away from home

Jeff Ennis: Recent research commissioned by the Secretary of State's Department shows that under the existing system, students from poorer backgrounds are leaving university with debts of almost £10,000, whereas other students leave with debts of £7,000 or just under. Given that, will my right hon. Friend explain how setting a differential fee will not encourage more working class children to choose the cheapest course closest to home?

Charles Clarke: There are several different answers to that question. First, as my hon. Friend appreciates, a series of measures is in place to provide resources for students from poorer backgrounds to go to university. The fee remission, the grant and bursaries from different universities are examples. Secondly, it is important to have a system of repayment that is based on the tax system, rather than a different sort of loan, and a zero real rate of interest, thereby taking account of an individual graduate's earnings. Another sort of loan would not do that. Both points are significant reassurances to people who intend to go to university.

Phil Willis: Does the Secretary of State agree that whether resources for universities derive from differential fees, flat-rate fees or progressive income tax, the Chancellor will have to make an estimate of the amount of money that he will loan to universities in 2005–06? In the previous Session, the hon. Member for Isle of Wight (Mr. Turner) asked the Government what the gap was. The Minister for Lifelong Learning, Further and Higher Education spoke at a meeting that I recently attended and said that it was £1 billion. Will the Secretary of State clearly define the gap that differential fees, flat-rate fees or any other mechanism are trying to plug?

Charles Clarke: There are two points. First, there is not a gap; the question is how much money would be raised. Estimates vary between £1.2 billion, £1 billion and £1.5 billion, depending entirely on the fees that are charged. I shall not make an estimate for the simple reason that we do not know the sort of fees that different universities will charge for different courses. It would be ludicrous to try to pretend that we did.
	The second point is much more important, and I think that it is to what the hon. Gentleman was referring. I have made it clear, and I take the opportunity to do so again today, that we see the fee income that will be generated, however much it may be, as being additional to the commitment made by the state in the comprehensive spending review. That amount went up significantly in the last CSR, and I expect it to increase in the next one. In other words, we are talking about the fees representing extra money to universities, rather than a replacement for money from the taxpayer.

Shaun Woodward: Will the Secretary of State tell the House what impact he expects his proposals to have on my constituents, whether they will lead to greater aspirations being realised for students from poorer income families and, specifically, whether there is a case for the Government looking at the threshold level being indexed to average earnings in the country?

Charles Clarke: My assessment is that our proposals will make it more, rather than less, likely that young people in my hon. Friend's constituency will see university as a real possibility. That is the example in other countries that have established such a system, such as Australia. The example of the Cambridge bursary scheme announced last week, which would provide £4,000 on top of the £1,125 fee remission and the £1,000 grant to allow students from poorer families to go to Cambridge, is a major new development even before our proposals have been introduced, but it was influenced by them, and it proves that our system will generate precisely the kind of ambition in my hon. Friend's constituency that I know he wants to promote.

Grammar School Ballots

Jonathan Djanogly: What recent estimate he has made of the cost of a grammar school ballot.

David Miliband: The cost of a ballot will depend on the particular circumstances in the area in which it takes place.

Jonathan Djanogly: At a time when the Government are supposedly supporting diversity in the types of school on offer and in the specialisations that schools can provide, why are they still fixated on attacking grammar schools and wasting time and money through their failing ballot system?

David Miliband: It is Conservative Front and Back Benchers who are fixated on the 4.5 per cent. of schools in the country that are grammar schools. We are fixated on raising standards in all schools.

Phyllis Starkey: When the Minister is considering ballots for grammar schools, will he look again at the experience of Milton Keynes in the 1990s, when the Tory-controlled Buckinghamshire county council forced us to go through three successive ballots to try to persuade people to vote for grammar schools, which I am happy to say they did not? Does not that demonstrate the Tory party's continuing obsession with trying to concentrate resources on a small number of children instead of using them across the piece to bring up educational achievement, particularly for low achievers?

David Miliband: My hon. Friend makes an important point. The Government are committed to ensuring that there is no extension of the 11-plus. Final decisions on school organisation, including grammar schools, are a matter for local people.

Bob Spink: Could we have ballots for new grammar schools?

David Miliband: The hon. Gentleman was here in 1998 when the House debated the School Standards and Framework Bill, which specifically excluded debate on new grammar schools. [Interruption.] I beg the hon. Gentleman's pardon: I am told that he was not here. But some of my hon. Friends were, and the House made it absolutely clear that we want no extension of selection at age 11. If the hon. Gentleman's party wants to make that the battleground for the next general election, it is very welcome to do so.

Apprentice Footballers

Joan Walley: What changes he plans to make in training provision for apprentice footballers.

Ivan Lewis: SkillsActive, the sector skills council for active leisure and learning, and the Learning and Skills Council are developing a modern apprenticeship framework in sporting excellence, which includes football. It is focused on aspiring professional athletes; it will cover their needs as sporting professionals, support their long-term career needs once their sporting career ends and offer a safety net for those athletes who are unsuccessful.

Joan Walley: I thank my hon. Friend for that reply. Much as we would like every trainee footballer to become a Stanley Matthews, David Beckham or Wayne Rooney, something like 85 per cent. of trainee footballers fall out of the game over three to four years. Will my hon. Friend assure the House that he will meet again with the Professional Footballers Association to make sure that the two-year apprenticeship scheme proposed by the Learning and Skills Council will meet all the academic needs of footballers? We need to make sure that those who do not make it are able to pursue education and training for other careers, which may not be in football or even in sport.

Ivan Lewis: As a Manchester City supporter, I do not want young people to aspire to be David Beckham, but I am aware of the concerns expressed by some in football at the proposed changes and the timetable for implementation. Earlier this week, my hon. Friend the Member for Vauxhall (Kate Hoey) and I met representatives of the Professional Footballers Association and the chief executive of SkillsActive. I have asked them to convene a further meeting with representatives of football, including the premier league, to discuss the best way forward. It is essential that every effort be made to ensure that the new modern apprenticeship properly meets the needs of young people embarking on a career in the professional game. This issue is of equal importance to big clubs such as Manchester City and to smaller clubs such as Port Vale and Norwich City.

Patrick McLoughlin: Bearing in mind the considerable wealth that some of these young footballers could earn in later life, should they not pay top-up fees?

Ivan Lewis: The main thing about the ability of young people to enter football as a career is the fact that they pay no up-front fees at all.

School Funding (Norfolk)

Henry Bellingham: When he will next meet Norfolk local education authority to discuss school budgets.

Stephen Twigg: My right hon. Friend has no plans to meet Norfolk local education authority to discuss school funding. Measures to restore stability and certainty to school funding were announced on 29 October and will provide a guaranteed minimum increase in every school's per pupil funding, additional resources at LEA level, which can be targeted at schools with additional pressures, and a package of transitional support, including grant of £5.3 million for Norfolk LEA that can be targeted at those schools facing the greatest difficulty in bringing their budgets back into balance.

Henry Bellingham: Is the Minister aware that the Secretary of State was assuring Norfolk schools this time last year that all of them would have a reasonable increase in their budget in line with inflation? As he is well aware, events turned out differently, and many schools in my constituency suffered their worst budget in living memory. Beacon schools such as St. Edmundsbury, Reffley and Fairstead had cuts of up to £100,000 and had either to raid their capital reserve or to get rid of staff. The Secretary of State is saying exactly what he said last year. Can we trust him?

Stephen Twigg: I am grateful to the hon. Gentleman for reminding us of the events of the past year. We have tried to learn lessons from those events. I should like to quote Alec Byrne, a Conservative member of Norfolk county council and cabinet member for education, who said:
	"The better the overall funding level for Norfolk, the fewer problems there will be in schools. We have been working hard to persuade the Government that Norfolk needs a better overall settlement, and that is what we appear to have achieved."

Tim Collins: If the Secretary of State should change his view about meeting Norfolk LEA, will he and the Minister address themselves not only to the overall level of budgets but to the fairness of allocation, especially to rural areas? My hon. Friend the Member for Fareham (Mr. Hoban) has received a letter in the past week from the head teacher of Sheringham high school in Norfolk saying that it will have to sack two and a half teachers next year because of the new funding settlement. In my constituency, as in many other rural constituencies represented by hon. Members on both sides of the House, schools, such as Settlebeck school, are for the first time ever having to go cap in hand to parents to ask for money for school books. When will the Government be fair in allocating resources to rural areas?

Stephen Twigg: We seek to be fair to all areas, including rural areas. If representatives from Norfolk LEA request a meeting with my right hon. Friend, he will be more than happy to meet them. I am astonished at the hon. Gentleman's comments, given the situation in his area. In Cumbria, per pupil spending on education has increased since 1997 by £960.

Michael Fabricant: What about Norfolk?

Stephen Twigg: The hon. Member for Westmorland and Lonsdale (Mr. Collins) referred to Cumbria in his question. I am happy to talk about Norfolk, and to remind the hon. Member for Lichfield (Michael Fabricant) of the positive response from the Conservative council there. I only wish that we had the same honest response from Conservative Members in this House.

Richard Bacon: May I just say that Alec Byrne is a very sound man? Last week, I sat on a platform with him talking about the council tax—

Mr. Speaker: Order. Perhaps the hon. Gentleman could put question 6.

Schools (Private Finance Initiative)

Richard Bacon: If he will make a statement about the use of the private finance initiative in the redevelopment of schools.

Margaret Hodge: The use of the private finance initiative in schools has been a popular and successful programme. It has been popular in that more than 100 of the 150 local education authorities in England have applied to take part, and it has been successful in that we have progressed from one contract covering one school in 1997 to 64 contracts covering 600 schools today. Services have started under 39 of those contracts, and they represent a private sector capital investment of more than £1.7 billion.

Richard Bacon: The Secretary of State has talked about a transfer system for capital allocation grants for schools. Hobart high school in south Norfolk, a very fine school, which the Secretary of State and I visited together to look at the classroom of the future, would willingly forgo its capital grant allocation for several years if it could get a relatively small sum to finish off the work going on under the private finance initiative so that it could properly meet all its students' needs. Do Ministers agree that there is room for more flexibility in the way capital allocation occurs in the period after a PFI contract has been let? The Secretary of State suggested that he would look at that matter. Will Ministers keep it under review, especially as the sums involved may be quite small? That could make all the difference to the schools involved.

Margaret Hodge: The PFI contract for Norfolk has been particularly complex but innovative, because we have been trying to provide capital infrastructure and services in a wide range of rural schools. I think that it is the first project of that kind, and there have, to that extent, been problems with it. However, on what the hon. Gentleman asks for in relation to Hobart high school, we are looking at the situation there, and I agree entirely that we need to be flexible in how we administer that PFI contract to ensure that we get value and spread the benefits to as many schools as we can in Norfolk.

James Purnell: Will the Minister congratulate Tameside council and Alder high school on their new building, which has been built on budget and on time and has transformed applications to that school? It was significantly under-subscribed and now it is significantly over-subscribed. Given that record of achievement, will she look seriously at Tameside's bid for a wide range of investment in six or seven new schools in the constituency?

Margaret Hodge: I congratulate Tameside council. Indeed, I congratulate all the councils that are engaged in the PFI programme. Without it, we would not have been able to achieve the level of capital investment in our schools that we have. We inherited a legacy of £750 million being invested in schools. By 2005–06, the figure will be over £5 billion. That is partly due to the PFI element. Of course, we will consider the bid from Tameside, but I am sure that my hon. Friend will recognise that that bid has to be considered alongside many other bids by people anxious to participate in the programme.

Vincent Cable: I represent a constituency with several PFI schools. There is satisfaction that schools have been built on budget and on time, but there is growing alarm among head teachers at the amount of time that they have to devote to negotiating the minutiae of things such as telephone charges and who is responsible for erecting shelves in school libraries. However, can the Minister clarify one point in particular? When there is a dispute between a school and a PFI landlord about the priority to be given to the safety of children over such things as gates, who is responsible—the landlord or the school?

Margaret Hodge: I will look in detail at issues that the hon. Gentleman wishes to raise with me. Clearly, the safety of children must be paramount, and that should be built into the terms of the contract as they are specified. If there is a problem with a particular contract in his constituency, he should draw it to our attention. We will certainly examine it.
	Clearly, the skills of negotiating contracts are new for head teachers and others engaged in PFIs, but I hear from many head teachers that they feel relieved at not having to get involved in the day-to-day running of things such as changing light bulbs or making sure that clocks are synchronised in classrooms. That enables them to focus much more of their time on what they are there for, which is raising standards in the classroom.

Student Bursaries

Ross Cranston: What plans he has for university student bursaries; and if he will make a statement.

Brian Iddon: What plans he has to provide university student bursaries; and if he will make a statement.

Alan Johnson: We have made it clear that universities will need to offer bursaries and other forms of financial support in their access agreement if they want to charge a fee above the standard level. We are considering and discussing the precise contents of access agreements and the duties of the office for fair access and will make a statement in due course.

Ross Cranston: I thank my right hon. Friend for that reply. While I fully support the policy on fees, one aspect of its fairness is the availability of bursaries. Not all universities have the same kitty as the university of Cambridge. What about universities such as my local university, the university of Wolverhampton? What expectations does he have of such universities, and what has been their response so far to the idea of providing bursaries?

Alan Johnson: I have written to the university of Wolverhampton, and copied my letter to local MPs, because the university made a mistake in its calculations, which it has accepted, in relation to the money that may be available. I know that many local MPs were influenced by that miscalculation. Like many modern universities, it is determined to ensure that it gives bursaries. Its understandable and genuine concern is that because it has a higher level of non-traditional students—to use the jargon—it may be forced to put more of its extra income into widening participation, and in a sense be penalised for succeeding in widening participation in the past. We are seeking to deal with that important concern in discussions with the university sector.

Brian Iddon: The transparency review process showed that all universities are short of money to support their teaching infrastructure, including staff salaries. Is it reasonable to expect all those universities to recycle some of the fees money into bursaries? Would it not be better if the Government supported poorer students by increased maintenance grants? Will my right hon. Friend explain the expression "above the standard fee"?

Alan Johnson: Universities need money to invest in their infrastructure and the pay of people who work for them—I am talking about all staff, not just academics, whose pay has fallen behind—and they tell us that they will also earmark a proportion of the extra money for bursaries. Whether universities should be forced to put a certain amount of money to one side is a controversial point that we are in discussions about.
	The definition of the standard fee is the current £1,125. When it comes to universities being able to charge more than that, under our proposals there is, for the first time, a financial imperative for them to reach sensible access agreements to ensure that they are paying more than just lip service to widening participation—as I am assured that almost all of them are, so that should not create an insuperable problem.

Tim Boswell: Do Ministers appreciate that while they temporise in taking decisions and submitting them for the judgment of the House, universities have to get on with the job of issuing prospectuses, including those for students who will commence their studies in 2006, at a time when the details of the tuition fee structure, the bursaries available—state or private—and the access agreements are completely unclear to them?

Alan Johnson: Let me try to make matters clear. The new arrangements will not be introduced until after the next general election—after 2006. The hon. Gentleman is quite right. We need to ensure that we have the Bill in place and that it receives Royal Assent in time for the cohort of students who are looking to take up their places in 2006–07 to be aware of the fees and the access agreements, and we are working to that time scale.

Chris Grayling: Bursaries help poorer students, but Ministers seem to be totally unaware of the impact that their proposals will have on lower-paid graduates, particularly those in key jobs. Is the Minister aware that, under his plans, 10 years after starting work an NHS radiographer will be paying £1,500 a year in debt repayments—almost 7 per cent. of take-home pay—and still have debts of more than £10,000 outstanding? How will that help to tackle the acute shortage of young people who are willing to go into key roles such as that?

Alan Johnson: Let me make it quite clear that currently the average debt, as recorded by the student income and expenditure survey, which was published last week, is £8,666. We estimate that the figure is likely to increase to around £15,000, but for poorer students there is fee remission and the introduction of a maintenance grant, and there is a much more beneficial system of repayment. The main issue is how to get more money into our universities. The hon. Gentleman, whom I welcome to his post, has to explain how a serious, mainstream political party can suggest that the answer to this problem is to take away the £900 million that universities currently have and do away at a stroke with 100,000 places. I rather like the hon. Gentleman—we are going to get on famously. He said that the problem for students—

Mr. Speaker: Order. I listened to what the hon. Gentleman had to say—the Minister does not need to tell the House.

Eric Joyce: Does my right hon. Friend agree that if we are to create much wider access to the leadership of our national institutions and leading companies, we must first open up access to our elite universities? Bursaries will do exactly that.

Alan Johnson: That is absolutely right. We need to get youngsters from all backgrounds to acquire two decent A-levels, because where that happens, nine out of 10 go on to higher education, but there is an 8 per cent. gap between those who apply to Russell group universities, for instance, and to other types of university. That is why the Russell group published yesterday a very welcome document on its intention to provide bursaries post-2006 to help tackle this problem. My hon. Friend is right: for the first time, we have an opportunity to close the obscene social class gap that has dogged our higher education sector for the past 50 years.

Jim Cousins: On bursaries created out of fee income, will universities be free to have their own tests of income, in order to decide who gets them and who does not, or do the Government intend to impose a standard test of income across all bursary schemes?

Alan Johnson: No, we do not intend to apply a standard test of income. We intend to look at how universities are helping to widen participation, and to help students from poorer backgrounds. That could take the form of outreach activity in primary schools, which has had a marked effect, and raising the aspiration of 14-year-olds to go to university. It could also take the form of providing extra pastoral care, student support through extra grants, and so on. The access regulator's directions will be published when the House considers the legislation. We need to be clear that a proper arrangement is in place to help such students, and it forms a major element of our proposals.

Post-16 Education

Nicholas Winterton: What assessment he has made of the availability of practical training courses in the post-16 education system.

Ivan Lewis: Every local learning and skills council has been asked to undertake a strategic area review of its post-16 provision. These reviews will identify changes required to ensure that young people and adult learners in every community have access to a choice of high quality provision that supports their progression and attainment. Such provision will include quality vocational education. Some 230,000 young people are currently undertaking modern apprenticeships in this country—the highest ever number. In our skills strategy, we announced our intention to introduce a new entitlement to a free first level 2 qualification for all adults.

Nicholas Winterton: I am grateful to the Minister for that reply, but does he agree that our country and society, including industry and commerce, are in dire need of more young people with practical experience, qualifications and expertise? The question of whether young students go on to further or higher education should be based on their needs, merits and qualifications, and not on an arbitrary target of entry to university, or to any other higher education institution.

Ivan Lewis: This Government are committed to ensuring that we have high quality, high status vocational education, and that we do not divide young people into sheep and goats, as the Conservatives seek to do. I should point out that a significant proportion of the 50 per cent. of young people who will go into higher education will do so via vocational education. If we repeat the mistakes of history and say that the choice is between either vocational education or higher education, and that we regard vocational education as second rate, we will again fail to deliver the high quality, high status vocational education that we need.

George Stevenson: Is my hon. Friend aware that in areas such as Stoke-on-Trent, which is going through the most profound economic and social changes, we continue to be blighted by a skills gap? It is amazing that while those changes are taking place there is still a lack of the necessary skills. Is he satisfied that the balance between education and skills that our learning and skills councils are operating is correct?

Ivan Lewis: The challenge in closing the skills gap is to ensure that far more young people stay on in some form of education or training, and make progress post-16, while giving the adults who are already in the labour market, or who are still on the edge of it, the opportunity to up their skills. School standards, Sure Start and a new approach to education between 14 and 19, combined with a coherent adult skills strategy that enables millions of adults who are already in the workplace to upskill, is the most effective long-term way to narrow the skills gap that continues to undermine this country's productivity.

Mark Simmonds: Globalisation demands the raising of post-16 and adult education skills and standards, but the recent Ofsted and adult learning inspectorate reports were highly critical of existing provision. In addition, the Learning and Skills Council figures demonstrate that the three-year funding allocation will not even provide sufficient money for the Government's core priorities of education and basic skills for 16 to 18-year-olds. What does the Minister intend to do to reverse that situation, and will he assure the House that the anticipated and feared funding shortfall—equivalent to losing 10,000 full-time students, or up to 70,000 part-time students—will not materialise?

Ivan Lewis: I welcome the hon. Gentleman both to the House and to the Front Bench, but it does not seem to me that, in the context of a debate about education, a party that advocates 20 per cent. cuts in education spending can say that there are inadequate resources to deliver the education reforms that we need. It is true that we need to improve the quality of work-based learning: 60 per cent. of work-based training courses were not adequate, but in 12 months that proportion went down to 46 per cent., and the work that the Learning and Skills Council and the inspectors are doing to raise standards is beginning to come through and improve the quality of provision. We are not complacent or smug, but the fact that the largest ever number of young people—230,000—are undertaking modern apprenticeships demonstrates that we are beginning to change attitudes to the importance of practical training.

University Funding

George Foulkes: What alternative proposals for closing the funding gap in university expenditure to those contained in the White Paper on higher education he has assessed.

Charles Clarke: The four principal alternative options for student finance and university funding are an increase in flat-rate fees, a graduate tax, an increase in general taxation, and real rates of interest on student loans. We have placed in the Library and supplied to the Select Committee information and analysis on each of those. Our conclusion is that variable deferred fees are the best option for securing the investment that our universities need, while giving them the freedom to respond to student demand, and providing for fair repayments for graduates.

George Foulkes: Does the Secretary of State agree that in order to get the extra money into universities, the principal alternative to the Government proposal is an increase in general taxation on the public, 83 per cent. of whom did not go to university? Many of them—people such as waiters and chefs—[Hon. Members: "What about cleaners?"]—and cleaners, too, earn a great deal less than £15,000 a year. Is the system that the Government are proposing not by far the fairest, as well as being very similar to the system already agreed by the Liberals for Scotland?

Charles Clarke: I wholly agree with the implication of my right hon. Friend's question. I add to his attack on that particular solution the point that, in respect of income from either general or graduate taxation, any Secretary of State has to face choices in priorities between university education and, for example, under-fives or primary education. There will always be pressure, which I personally welcome, to invest in the younger ages where we can make the greatest impact on reducing educational deprivation.

Nigel Evans: In examining the options for plugging the funding gap, has the Secretary of State thought of making variable top-up and tuition fees retrospective to the 1960s and 70s, when he and his Cabinet colleagues went to university, paid absolutely nothing for it and even received grants? Does he not understand the anger of parents in this country who look at him and his mates and wonder why people who received their university education for nothing are so keen and hungry to clobber today's children?

Charles Clarke: I know that the modern Conservative party has made a study of retrospection, as indeed it should. I also know that the modern Conservative position is retrospection—to go back to the elitist education of the 1960s. I believe that the country needs to look forward to the future rather than backwards, which means creating a university system that truly creates a competitive economy and strong society for the future.

Paul Farrelly: Before my right hon. Friend publishes the higher education Bill in January, will he undertake not just to knock down the alternatives but to engage in an open discussion about alternatives from first principles, starting with his own estimates—not some vice-chancellor's estimates—of university funding?

Charles Clarke: Yes, I will. As my hon. Friend will know, we have already had many discussions—directly and with others—on precisely those matters and from first principles. I have found all the discussions exciting and illuminating, though I am not sure whether he felt the same about my responses. I agree that a proper discussion of these issues, based on proper assessments, is right. I will say, however, as an important qualification, that many assumptions depend on what modelling is used for different sources of income for fees and so forth. That is not a particularly productive area of debate. The productive area is to examine the real alternatives from first principles, precisely as he suggests, in a direct and frank manner. We will do precisely that.

Alistair Burt: British universities look with some envy on the endowment income that universities abroad, particularly in the United States, receive. What long-term attention is he paying to finding imaginative incentives at this stage in order to help British universities to begin the process of building up their endowment income? At some stage in the future, it must play a larger part in funding than it does now.

Charles Clarke: The hon. Gentleman is entirely correct. We do need to build the tradition that exists in some other countries. To that end, we have set up a working party—led by the vice-chancellor of Bristol university, Eric Thomas, and including a range of individuals with substantial experience of how other countries have operated in that respect—to establish what sort of encouragement we should provide. It will consider whether we should make any changes in our taxation regime. Off hand, I cannot recall the precise timetable of the report, but we are close to being able to do so. I have just been advised by my colleague, my hon. Friend the Member for Bury, South (Mr. Lewis), that the detailed report on encouraging endowments should be published in April. Such endowments are important for universities' independence, as well as their funding.

Microsoft

Bob Blizzard: When he will conclude a new software licence agreement for schools with Microsoft.

Charles Clarke: I am pleased to announce that the British Educational Communications and Technology Agency and Microsoft have today signed a memorandum of understanding that, when implemented, will reduce the cost of Microsoft products to schools in England by as much as £46 million over the next three years. The new arrangements will come into effect from 1 January 2004. I believe that such an agreement demonstrates the advantages of co-ordinated procurement for schools across the country in respect of several different products, and I want to pay personal tribute to my hon. Friend for his campaigning on that matter over a considerable period.

Bob Blizzard: I thank my right hon. Friend for his answer and his kind words. I also thank him for the close interest that he has taken in this matter. This is really good news for schools. It was wrong that schools, which now have so many more computers because of the Government funding that enabled them to buy them, had to pay so much in licence fees to Microsoft. It was wrong that schools paid a higher rate than universities. I thank my right hon. Friend again for his fine announcement.

Charles Clarke: I thank my hon. Friend and I express my appreciation to both Microsoft, which worked well with us to try to find an agreement, and BECTA, which is negotiating effectively. As there are 25,000 schools in England but only a small number of suppliers, there is a powerful case in market terms for a more co-ordinated policy for the procurement of a number of different products. The case is strong both in terms of value for money for schools and in releasing more resources.

Top-up Fees

Sydney Chapman: What estimate he has made of the total level of debt of students following the introduction of top-up fees.

Charles Clarke: The level of student loan after the introduction of variable fees will depend on a number of factors: the level of fee charged by the student's higher education institution; how much loan they take out to cover the cost of that fee; how much maintenance loan they choose to take out; and the level of any bursary made available by the university. Those will all be decisions for higher education institutions and individual students.

Sydney Chapman: Surely, the Secretary of State has made an estimate of what the increase in student debt will be. Is not it true to say that it will probably double, and that that is most likely to lead to a graduate brain drain, whereby people go abroad to avoid having to pay considerable debts? Has he made any assessment of that?

Charles Clarke: I certainly do not accept the second part of the hon. Gentleman's question. On the first part, one can make a series of assessments based on different positions, as I said to my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly). Such assessments can be produced. As my right hon. Friend the Minister for Lifelong Learning, Further and Higher Education said earlier, our current estimate is just under £9,000 of debt, and it will go up under our proposals—of that there is no doubt—but not to the level indicated in some of the reports. As I said earlier, what is really important is to discuss the fundamentals of the scheme and to understand how it will impact.

SOLICITOR-GENERAL

The Solicitor-General was asked—

Crown Prosecution Service

David Kidney: What recent steps the Crown Prosecution Service has taken to improve the recruitment and retention of staff, with particular reference to prosecutors.

Harriet Harman: The Crown Prosecution Service has taken a number of steps to improve recruitment and retention of staff, particularly lawyers, which has resulted in a 26 per cent. increase in the number of lawyers in the CPS since 2001.

David Kidney: I thank my right hon. and learned Friend for that answer. Will she accept my sincere tribute to her personally for her hard work and the committed attempts that she has made to raise working-life standards in the CPS? I especially draw attention to her commitment to the training of non-legal staff so that they can obtain qualifications that enable them to aspire to go on to become prosecutors. Is not that the best way to improve working conditions in the CPS and to aid recruitment and retention?

Harriet Harman: I thank my hon. Friend for his kind comments and I will pass them on to those in the CPS who have worked on the CPS law scholarship programme. We want to ensure that administrative and clerical employees in the CPS have the prospect of becoming lawyers if they have the interest, potential and capacity to do so. That is what the CPS law scholarship scheme will do. We originally planned to have 213 CPS law scholars; this year—the first year of the scheme—we have 231. That is good not only for the CPS but for the legal profession, as it will reform the profession from the bottom up.

Bob Spink: What progress has been made on improving the co-ordination between the Crown Prosecution Service and the police.

Harriet Harman: Proper co-ordination between the police and the CPS is vital at all levels. At ministerial level, the Attorney-General and I work with our ministerial colleagues in the Home Office. In Essex, the chief crown prosecutor, John Bell, and the chief constable work together as part of the local criminal justice board. The police and the CPS work together on the front line as a prosecution team in Essex.

Bob Spink: The right hon. and learned Lady is having a very good morning, as I, too, shall congratulate her on her answer. I thank her for her answer and congratulate the Government on their initiative. The CPS in Essex is running the only whole-county pilot and has shown how valuable such a scheme can be. Will she join me in congratulating Essex CPS, and will she roll out the pilot scheme across the whole country so that other areas can benefit from it.

Harriet Harman: I thank the hon. Gentleman for his congratulations, which are justly deserved by the prosecution team in Essex. The team warmly welcomes his interest in its work. I know that he has been to Southend and Chelmsford and paid close attention to that work. It is important that everyone works together in the criminal justice system. The police, the CPS and the courts all have their separate roles, and each is independent, but they must all work together.
	As hon. Members are being so nice to me, I am getting worried that people might think this is turning into something of a resignation session, so may I invite the next questioner to launch an attack on me?

Bill Olner: I will not take up my right hon. and learned Friend's request to launch an attack on her.
	The new justice centre being built in my constituency will house the police, the CPS, and the probation and victim support services. That is the way things should be in the future. I hope that my right hon. and learned Friend will come and have a look at the centre. What input is her Department having into that exciting new scheme?

Harriet Harman: As my hon. Friend knows, we very much support the new all-in-one justice centre in Nuneaton, and the CPS is very much part of it. I visited the centre at the very outset, but I should like to keep up with progress there. It is important that people do not have to go from pillar to post, as it is sometimes quite difficult for them—and especially for victims and witnesses—to find their way around the system. If we want to deter people from committing offences, and to know that the justice system is working properly, that is the way to do it.

David Heath: Is the CPS working with the police to develop clear guidelines on prejudicial publicity, given the impact that it might have on failed prosecutions or the fairness of trials? That applies particularly to the police, and perhaps to members of the Home Office ministerial team. Why does the Attorney-General intervene so rarely in matters of prejudicial publicity? When is he going to do a better job in that respect?

Harriet Harman: When complaints are made that reports or comments might prejudice a fair trial, the Attorney-General always acts on them. He always investigates such complaints, and the hon. Gentleman can rest assured that he always makes the right decision about what to do. In each case, a balance has to be struck between the need for free speech, an open press and a right to know, and the need to ensure that defendants can have a fair trial. That is the ring that the Attorney-General holds. If the hon. Gentleman has concerns about how the Attorney-General has acted in any individual case, perhaps he will let me know.

Julie Morgan: Is my right hon. and learned Friend aware that CPS staff are based in Cardiff's Rumney police station? Does she agree that that means that there is a much better chance that charging standards are got right, especially in cases of assault?

Harriet Harman: I agree with my hon. Friend that it certainly does. In the past, the problem has been that the police have investigated a matter and charged someone, after which the case has been sent to the CPS. A CPS lawyer has then looked at the case and reviewed it, and decided either to change or downgrade the charge, or to drop the case altogether. That process built disappointment into the system for people who thought that their case was going ahead, only to discover that there was not sufficient evidence. The work that my hon. Friend has described means that CPS staff are able to advise the police right at the start of the process, and will ultimately bring the charges themselves. Right from the outset, therefore, the system will be fairer—for both defendants and victims, because a case will either be going to trial in court, or not.

Dominic Grieve: I was going to say that I intended to treat the right hon. and learned Lady far more gently than has been the case with the Home Secretary and his spin doctors over the past 24 hours, but in view of her earlier anxieties about what might happen to her career if she is not treated more harshly, that might not be the right thing to say.
	I return to the important question about the Home Secretary and his expressions of view when arrests take place. It is not merely a question of whether that might be a contempt of court, or prejudicial to a fair trial. The problem is that it could lead to the embarrassing possibility that it is suggested in court that a fair trial might be prejudiced. Does the Solicitor-General agree that every Minister, and the Home Secretary in particular, ought to have that very much in mind before they express any view on a matter that is subject to police investigation?

Harriet Harman: Everyone—that includes absolutely everyone—must have in mind the issue of whether it will be possible for somebody to get a fair trial. That is the case. The role of the Attorney-General is to ensure that that happens and to enforce the law of contempt if a fair trial is not possible because it has been prejudiced.

Street Crime Initiative (North-East Derbyshire)

Harry Barnes: If she will make a statement on the impact of the Crown Prosecution Service's role in the street crime initiative in North-East Derbyshire.

Harriet Harman: The impact of the street crime initiative has been to cut street crime and to bring more street crime cases to court. It has also had a good effect in the police and the CPS working even more closely together and in the CPS doing more to help victims of crime make statements and give evidence in court.

Harry Barnes: I welcome that response, but the question was about the street crime initiative in North-East Derbyshire. My understanding is that although it is working well within the larger conurbations, there are problems in areas such as mine. There may be a link through the displacement of crime from the neighbouring conurbation of Sheffield, which may be affecting us, and social problems arising from the decline of the manufacturing industries.

Harriet Harman: My hon. Friend makes an important point. Street crime is obviously not just a problem in the big cities—the so-called street crime hotspots—it is of concern in all areas, including North-East Derbyshire. It is important for the police, the crown prosecutors, the local council and community groups to work with him as the Member of Parliament for the area to ensure that everyone is doing what they can to tackle street crime. Sometimes it might be categorised as minor crime, but it can make people fearful and it is important to bear down on it.

Business of the House

Oliver Heald: Will the Leader of the House please give us the business for next week?

Peter Hain: The business for next week will be as follows:
	Monday 8 December—Remaining stages of the Planning and Compulsory Purchase Bill.
	Tuesday 9 December—Conclusion of remaining stages of the Planning and Compulsory Purchase Bill, followed by a debate on fisheries on a motion for the Adjournment of the House.
	Wednesday 10 December—A debate on European Affairs on a motion for the Adjournment of the House.
	Thursday 11 December—Estimates [1st Allotted Day]. There will be a debate on child care for working parents, followed by a debate on people, pensions and post offices. Details will be given in the Official Report.
	At 6 pm the House will be asked to agree all outstanding estimates.
	The provisional business for the following week will be:
	Monday 15 December—Proceedings on the Consolidated Fund Bill, followed by Second Reading on the Child Trust Fund Bill.
	Tuesday 16 December—Remaining stages of the European Parliamentary and Local Elections (Pilots) Bill.
	Wednesday 17 December—Second Reading of the Asylum and Immigration (Treatment of Claimants, etc.) Bill.
	Thursday 18 December—Motion on the Christmas recess Adjournment.
	The House may wish to be reminded that we will rise for the Christmas recess at the end of business on Thursday 18 December and return on Monday 5 January.
	I should also like to inform the House that the business in Westminster Hall next week will be:
	Thursday 11 December—Debate on accelerating the United Kingdom response to the HIV/AIDS epidemic.
	Details of the business announced today are now available on my office website: www.commonsleader.gov.uk, which goes online today. For the convenience of Members and following representations I have today placed a complete list of all the Bills and draft Bills that have been introduced or announced for this Session in the Library. As has always been the case, other measures will be brought forward as the Session progresses.
	[The list of estimates to be agreed are as follows: vote on account for House of Commons 2004–05 (HC17), vote on account for National Audit Office 2004–05 (HC18), vote on account for Electoral Commission 2004–05 (HC19), vote on account 2004–05 (HC16), winter supplementary estimates and new estimates 2003–04 (HC15).
	All stages of the Consolidated Fund Bill will also be considered in due course.]

Oliver Heald: We will study that list with great interest.
	Has the Leader of the House had the opportunity to read the Audit Commission report into why increases in council tax average 13 per cent.? Despite Ministers' attempts to deflect criticisms of the increases, which pushed band D rates in some places over £1,000 for the first time, the report concludes that town halls that received bigger Government increases had smaller council tax rises and those with smaller grant increases had higher council tax rises. It also states that Government grant—[Interruption]—hon. Members should listen to this—was
	"the single biggest determinant factor in this year's increases."
	The report highlights the geographical shift in resources that the Government have deliberately imposed. Since the report clearly demonstrates that everything that we have been saying about the Deputy Prime Minister's manipulation of council tax is true, may we have a debate in Government time on that vital report?
	On Monday and Tuesday, the House will debate the Planning and Compulsory Purchase Bill. It is a matter of great concern that such a large number of amendments have been tabled by the Government to introduce a fixed tariff payment system for planning gains, despite the fact that the Government are currently consulting on that very issue and that the consultation does not end until 8 January. Yet we are supposed to debate the Bill and table amendments by this evening. [Interruption.] Apart from the discourtesy, about which the hon. Member for Bolsover (Mr. Skinner) is not too worried, surely such a consultation should run its course before the crucial decisions are reached. It reminds me of something: the big conversation, where, as we know, not much listening is involved at all.
	On the Hutton inquiry, does the Leader of the House expect the report to be published in the week commencing 12 January? Will he say a little more than he did on 16 October—either now, or next week—about the Government's intentions? Does he expect the report to be received by the Government and those who have taken part in the inquiry at the same time? Does he agree that Opposition parties should receive the report at the same time, and will he make representations to that effect? How much time does he expect to elapse between receipt of the report and the Prime Minister making a statement in the House? Can he confirm whether there will be sufficient time for hon. Members on both sides of the House to consider the report—at least a week—before a full debate and whether the Prime Minister will lead for the Government in the debate as well as the statement?
	Finally, on a different matter of which I have given the Leader of the House notice, hon. Members on both sides of the House are concerned about the airports capacity White Paper. Obviously, we know that there will be a statement about it before Christmas, but will he tell us what the date of the statement will be?

Peter Hain: I do not know whether the hon. Gentleman has been advising the House authorities, but the annunciator was saying that business questions were to start at 12.30 am.
	On the council tax, the truth is that we inherited a policy from the Conservative party on council tax arrangements, and we have been making it fairer. Is it not significant that the biggest increase is, I think, in a Conservative flagship council, Wandsworth, which has had a 57 per cent. increase? The truth is that, as the Audit Commission made perfectly clear, we need to get the balance right in ensuring that council tax payments are fair and that the Government contribution is delivered to local authorities and then passported on to local services in a way that results in fair contributions by local residents, rather than unfair ones, and eliminates any inefficiency in the distribution system.
	The Planning and Compulsory Purchase Bill, as the hon. Gentleman understands, is designed to speed up the planning process and free up opportunities for enterprise and business to regenerate local communities, especially in deprived areas, which will, in addition, increase flexibility in the economy and help to boost prosperity.
	On the big conversation—[Interruption.] Conservative Members scoff, but I was with the Prime Minister in south Wales, where we launched the big conservation on Friday last week. Contrary to the Conservative Front-Bench team's stance as an attack machine, with a series of dodgy policies that have not been thought through—we shall come back to that—we believe that the big challenges, whether we are dealing with local crime and antisocial behaviour, which we were discussing in Newport on Friday, or with the big challenges for decades ahead, are best resolved by getting the whole public into a conversation about how Britain should confront them and how people feel the future should go.
	On the Hutton inquiry, I made clear in the statement that I made on 16 October what the procedure would be. The Government commissioned the Hutton report and set up the inquiry, and we will ensure that Parliament has a proper opportunity to debate the outcome, as I said on 16 October. The Cabinet will consider it in the appropriate fashion and the Prime Minister will, of course, want to be accountable to the House, as I also made clear on 16 October.
	The airports issue is important, and I am grateful to the hon. Gentleman for raising it and for giving me advance notice. I can help him only by confirming that my right hon. Friend the Secretary of State for Transport will make a statement as soon as he can to bring the White Paper forward. He will report on it to the House in the proper way, and the House will have an opportunity to consider it.

Paul Tyler: My colleagues and I strongly endorse the request for an urgent statement on council tax, not least so that the situation can be made more clear and transparent for local authorities led by all three parties. Does he share my surprise that the hon. Member for North-East Hertfordshire (Mr. Heald) did not apologise this afternoon? After all, after the poll tax fiasco, it was his party that introduced the system, with its inherent and fundamental flaws, to which the Audit Commission has drawn our attention. However, it is not sufficient for the Leader of the House to pretend that, after six and a half years, everything can be blamed on the previous Government. Will he give an undertaking that we will have no more incomprehensible gobbledegook explanations from the Deputy Prime Minister, but a simple word of apology to the House and to local authorities, which have been led astray on that matter? Will the Leader of the House also confirm the official hints in recent days that comparisons are now being made with completely different systems of local taxation—not least the local income tax that we have suggested, which would add only 4p in the pound to the normal rate of taxation and enable us to scrap the whole council tax system—and acknowledge, given his radical past, that the council tax is regressive and unfair and that a local income tax would be progressive and much fairer?

Peter Hain: Here we have it: the Liberal Democrats propose an extra 4p in the pound for every taxpayer through their expensive local income tax policy. We now have that on the record, although I note that at recent Liberal Democrat press conference, the back of the press release—it was not supposed to be released but was inadvertently photocopied—referred to a 6p increase, so it could be even higher.

Paul Tyler: Where is it?

Mr. Speaker: Order. Perhaps Mr. Tyler should listen to the Leader of the House. He put the questions to the Leader of the House, and I expect him to listen.

Peter Hain: An income tax rise of 4p in the pound from the Liberal Democrats is high enough for me, and would be high enough for the average council tax payer and resident. We know that the Liberal Democrats are a high-tax party. They want to load tax on hard-working and low-income families, but Labour is committed to a much fairer system of local government finance. However, the hon. Gentleman is right to remind us that the leader of the Conservative party was responsible for the poll tax, which was one of the most unfair, regressive and punitive taxes in the history of this country.
	The level of council tax payments is a concern, and the hon. Gentleman was right to draw the House's attention to it. That is why we are reviewing the matter and why we have already made changes that bring the current system into line with many of the recommendations of the Audit Commission report. We will study that report further and with care before we introduce any other changes that are necessary.

John Lyons: My right hon. Friend will recognise the success of the national minimum wage, but 700,000 young people aged 16 or 17 are working in the British economy without protection. Can he find time for a debate on that issue?

Peter Hain: My hon. Friend has an opportunity to secure a debate by applying in the normal fashion, but I understand the concerns that he identified. We are, of course, very proud of the fact that we introduced the minimum wage, which benefits millions of low-paid workers, against the fierce opposition of the Conservative party, which, in the words of its leader, said that it would cost 2 million jobs. Since its introduction, an extra 1.6 million jobs have been created, which gives the lie to that accusation. I shall certainly consider the points that my hon. Friend made about young workers, and I continue to advise him to take every opportunity to raise them on the Floor of the House.

George Osborne: Can we have a debate on the way in which the Crown Prosecution Service treats mothers who are accused of killing their very young children? Sally Clark was my constituent and the victim of a gross miscarriage of justice. Another case is before the Court of Appeal today and, without in any way wishing to prejudge the court's decision, surely it is time to examine how the Crown Prosecution Service deals with such cases. Given the uncertainty of medical evidence and the little use of a long prison sentence in such cases, the matter is of enormous concern to many people.

Peter Hain: I understand the hon. Gentleman's concern, especially as the issue has affected his constituent. I know of the interest in such cases and the particularly strong arguments that his constituents put. I am sure that the authorities and the relevant Minister will note his points.

Lindsay Hoyle: Will my right hon. Friend consider finding time for a debate on the future of direct links between the west coast main line and Europe? We are the poor relations and such links would certainly help jobs in the north-west and everyone who uses that line.

Peter Hain: I am sure that the Secretary of State for Transport will want to consider those points carefully. My hon. Friend's constituency is affected and we want there to be a massive opportunity for extra investment and prosperity in the north-west of England. It is therefore important that the line through to the export market that accounts for nearly two thirds of all exports from the north-west of England operates as efficiently as possible.

Patrick Cormack: May I return to the airports White Paper? Is the right hon. Gentleman aware that Members on both sides of the House are anxious to see what is in it? Can he confirm that it will be published before Christmas and indicate whether that is likely to mean next week or the week after?

Peter Hain: I understand the anxieties that are felt, and I am glad to be able to tell the hon. Gentleman that the intention is to publish the report as early as possible. The intention is certainly to do so before Christmas but, in any event, it will be done as early as possible. It is important that such a crucial decision, which will affect many constituents of Members on both sides of the House, is taken and delivered and reported to the House in the proper fashion.

Alice Mahon: Is the Leader of the House aware that more than 200 MPs from all parties in the House have called for a review of the sitting hours? Indeed, when they were introduced, we were promised a review. Tuesdays and Wednesdays have become a nightmare as we condense everything into just a few hours, and I know, through talking to Ministers and Whips, that there is real difficulty in getting people to serve on Committees.
	May I draw my right hon. Friend's attention to the plight of the permanent staff, many of whom are anxious about their jobs and futures? Because of the uncertainty, casuals are now being employed and that surely brings with it a security problem for the House. Can we have a review of the hours, as we were promised? Let us debate the matter here.

Peter Hain: I know my hon. Friend's very strong views on this subject. I think that I am right in saying that she did not vote for the change in the hours. She has stuck consistently to her opposition to the change.
	As my hon. Friend and the whole House know, we are committed to reviewing the new sitting hours by the end of the Parliament. She also knows that I am seeking to address a number of the difficulties that have been brought to my attention about individual issues associated with the change. However, I do not think that it is right immediately to override the original decision, which was to have the changed hours in place for the rest of the Parliament and to review the matter before the end of the Parliament. I do not think that we should act prematurely.
	In respect of the staff, I am concerned about the reports and rumours that I have heard and I have discussed the matter with the authorities. I shall be very happy to receive additional representations from my hon. Friend.
	As I have said before, there are strong feelings both for and against the changed hours. It is important that everybody who has strong feelings has the opportunity to represent them to me and suggest the exact changes that they want. Very few people have told me that they want to revert to exactly the old standard pattern of hours. Some have said that they want to sit longer on Tuesdays and others say that Committees should sit later in the morning. All those issues may be weighed up in good time.

Mark Field: I am sorry to have to return to the Audit Commission report but it confirms what many Conservative Members have said for some time: there was gerrymandering of the entire system last year against councils in London. Will the Leader of the House grant a debate on that because London councils—Conservative, Labour and Liberal Democrat—feel strongly that they have been deprived of vital funds? We need an urgent debate on the serious allegations made in the Audit Commission report that was published today.

Peter Hain: The truth is that all local authorities received an increase from the Government that was higher than inflation. That compares with the situation prior to 1997 under the Conservative Government when there were consistent cuts in funding from central Government to local authorities. The hon. Gentleman will find that six London authorities received grant increases of 8 per cent. or more. That is an example of the way in which the Government have provided generous funding for local services through local councils.

David Clelland: Those of us from the north-east would welcome a debate on council tax to destroy the myth that we have somehow been the beneficiaries of the changes that have been made. Is my right hon. Friend aware that Lloyds TSB has announced the closure of its call centre in my constituency and the centre's transfer to the Indian sub-continent with the loss of almost 1,000 jobs? May we have an early debate on the implications of that for the British employment market, private financial information and data protection, and about what the Government might do about that serious threat to British jobs?

Peter Hain: I well understand my hon. Friend's concern about any job losses in his constituency and I know that there will be an opportunity to consider the matter in a debate in Westminster Hall next Wednesday. We obviously should fight locally, as local Members, against any job losses but we are subject to a whirlwind of global pressures in which the outsourcing of some call centre jobs is continuing. Interestingly, higher value added call centre jobs tend to stay in this country.

Eric Forth: Oh, that is all right then.

Peter Hain: No, it is not all right. I want to see all jobs preserved, but I am sure that the right hon. Gentleman will agree that we cannot simply withstand competitive global pressures on our private enterprises, including call centre companies. He will understand that, and we are trying to combat the system as best we can.
	As my hon. Friend the Member for Tyne Bridge (Mr. Clelland) knows, the Government have put good procedures in place to help people into jobs, and unemployment has continued to fall in pretty much every parliamentary constituency since we came to power.

Hywel Williams: May we have a debate on the restrictive shellfish licensing scheme that is due to come into force in the new year, which will destroy half the jobs in the traditional shellfish fishery in my constituency on the Llyn peninsula? That is at least one good reason for the debate that I can discern. While the Leader of the House is considering that, will he have a word with the Department for Environment, Food and Rural Affairs, which clearly does not share my urgency or that of my constituents on the issue? I wrote to the Department on 9 October about the scheme that is coming in the new year but I have yet to receive any acknowledgement of that.

Peter Hain: If the hon. Gentleman is right about the beginning of his correspondence in October—I am sure that he is—the relevant Minister will want to find out why he has not received a reply. The hon. Gentleman will know that there is a debate on fisheries next Tuesday and I hope that he will catch Mr. Speaker's eye to raise the points that he wants to make on behalf of his constituents.

Gordon Prentice: My right hon. Friend and I want an elected second Chamber but, shamefully, it seems that we are to be saddled with a wholly appointed second Chamber. Will the Joint Committee on House of Lords Reform be reconstituted in the current Session with, if necessary, a new membership and revised terms of reference?

Peter Hain: That is a matter for the Secretary of State for Constitutional Affairs. My hon. Friend is right that I voted with him and others for an elected second Chamber but our position was defeated. [Interruption.] Conservative Members suggest that I was wrong. That may or may not be the case but the proposal was defeated by the Commons in any event, so there is no agreement on an elected second Chamber.
	While we are on the subject, may I sweep away a lot of the breathtaking hypocrisy on the matter? I noticed that earlier this week in the House of Lords, Conservative Lords defeated a Liberal Democrat motion that called for an elected second Chamber. We now know where the Conservative party stands on the matter, despite the position that has been shouted from the Conservative Benches. We shall see whether we can have an honest debate about who wishes to preserve the 92 hereditary peers in the House of Lords. All progressive people think that we should have a second Chamber that is more representative of opinion throughout the country than accidents of birth.

Robert Key: May I endorse the request of my hon. Friend the Member for Tatton (Mr. Osborne) for a debate on the role of expert medical witnesses in criminal trials? Following the acquittal of Trupti Patel, the case of my former constituent, Sally Clark and the predicament of my constituent Angela Cannings, I note that nothing has been heard of the review committee that the Attorney-General established six months ago to look into the issue. It is a matter of urgency to know what is now in the mind of the Government when they consider the cases that I mentioned.

Peter Hain: I well understand the hon. Gentleman's concerns, especially on behalf of his constituents. I would feel the same if my constituents had been similarly affected, so I shall ensure that the relevant Minister is aware of his urgency and his constituents' feelings.

Jackie Lawrence: Does my right hon. Friend share my disappointment that it appears that Russia is refusing to ratify the Kyoto protocol and that the United States, which is one of the richest countries in the world, has failed to set an example? Will he grant us a debate in the House on the Kyoto protocol so that we may reaffirm its importance to everyone in the world? It is not a question of economic growth, as is often said, but of environmental survival.

Peter Hain: I strongly agree with my hon. Friend. I understand that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs will be in Milan at the climate change conference next week precisely to spur on the world to take its responsibilities seriously, implement Kyoto—the Government have signed up to it—and reduce the impact of climate change throughout the world. I am not sure that the Russian Government have made their position on Kyoto as clear as my hon. Friend implied. We hope that Russia will ratify the protocol and allow it to come into force so that the world may begin to confront the horrendous challenge of environmental devastation and climate change.

Andrew Murrison: Will the Leader of the House convey to the Pentagon the alarm felt by many at reports that it is planning to recruit paramilitaries from political organisations? Will he seek assurances that such a thing will not happen in south-east Iraq, where it is felt that it is important that the police and security forces may act impartially and not as the servants of specific political organisations?

Peter Hain: The hon. Gentleman raises an important point. Given his expertise on the situation in Iraq, to which the Prime Minister referred yesterday, I know that the Defence Secretary will want to take his points seriously.

John Cryer: There were two questions earlier about the Audit Commission report that was produced today. The commission also pointed out the fundamental unfairness of our system of council taxation, which is not related to people's ability to pay and was introduced when the official Opposition were in government. May we have a debate on that so that we can consider the system of council taxation and point to councils such as mine that fritter away thousands of pounds on pet projects and put up their council tax by an enormous amount yet refuse to examine new powers that would allow them to introduce lower council taxation for groups such as pensioners on fixed incomes?

Peter Hain: Obviously, I am concerned about my hon. Friend's comments about the performance of his local authority. The House will want to look into that carefully. We have sought to develop and progress a much fairer system for local revenue raising—that is why the Minister for Local Government, Regional Governance and Fire is conducting a review that takes account of all the points that the Audit Commission made. It is important to read its report carefully, because it gives a much more rounded and balanced account of the situation than some of the more lurid headlines and political statements might suggest.

Eric Forth: Can the Leader of the House tell us when we will hear a report back to the House on the so-called big conversation? Will we be told how many of those events have been attended by the Leader of the House and by the Prime Minister, or how many of the 60 million people in this country attended them, and how many are Labour party members? We need to know those things. Most importantly, will we be told how many Government policies have changed as a result of the so-call big conversation?

Peter Hain: The right hon. Gentleman is expert at talking to himself in the middle of the night in this Chamber, so I guess that he will have no interest in the big conversation that is taking place with the public out there. I shall be happy, however, to continue to answer questions on it from him or from any other Member, because the truth is that we are doing something that no Government have ever done: we are carrying out a big consultation exercise about the challenges that face this country. Perhaps he does not think that the public ought to be involved in the hard choices that need to be made—for example, about an ageing society and the challenges that we face in funding our public services as an ever-increasing proportion of people are in retirement. A big conversation is required to give people an opportunity to express their own views on such matters.
	The right hon. Gentleman asks how many events I have taken part in. The Prime Minister has so far been involved in a whole range of events, starting in Bristol and Newport last Friday and continuing with others since. I was with him at the Newport event, and I intend to take part in another one early next week—

Eric Forth: Another one!

Peter Hain: The right hon. Gentleman asked me how many times I have taken part, and I am telling him. I also have my duties as Leader of the House, which I am discharging faithfully in answering his question at boring length. I shall take part in future events, as will other Ministers, because we want to involve the public in a big exercise to determine the future of this country. Neither the right hon. Gentleman nor other Conservative Members are interested in facing up to challenges such as the crisis in higher education and the problem of an ageing society. They would deal with those big issues in their traditional elitist fashion; we are doing it by involving the public, because that is what we believe in.

Hugh Bayley: Did the Leader of the House notice that this week Lloyds TSB and Norwich Union announced their intention to transfer large numbers of call centre and back-office jobs from this country to India? Can we have a debate about the globalisation of the telecomms industry, so that we can not only assess the risks that that poses to jobs in Britain and discuss how they can be minimised, but consider the benefits that the globalisation of communications provides to British companies, particularly in the financial services sector? If financial services were fully liberalised across Europe, British financial services companies, which are leaders in the field, would gain more work from others in Europe and thereby retain jobs in this country.

Peter Hain: My hon. Friend makes some telling points. Obviously, he can apply for a debate; I am sure that the Secretary of State for Trade and Industry will also want to consider that opportunity. Evidence from the Call Centre Association suggest that companies that outsource part of their work create a big return for this country, in that the surpluses that they obtain enable them to expand services, create more jobs and contribute to our prosperity. It is painful and difficult when such churning takes place, with some jobs displaced and replaced by other, often value-added jobs, but it is not as straightforward as saying that we have lost jobs to another country—the return that comes back is important, too.

Edward Davey: May I continue the main theme of today's business questions and join my hon. Friend the Member for North Cornwall (Mr. Tyler) in imploring the Leader of the House for an urgent debate, before the recess, on the Audit Commission's report on council tax rises? That independent report confirms not only that the blame for high council tax rises lies with Labour Ministers, but that the unfair Tory council tax system is fundamentally flawed. Given that councils are currently having to set council tax levels for next year, and that we now know that for more than three quarters of councils the rise in non-education grant is a real-terms cut, is it not urgent that we have that debate in order to learn from the Audit Commission report and help councils around the country?

Peter Hain: How can a central Government-provided increase that is way above the level of inflation be a real-terms cut? This is Mickey Mouse Liberal economics. We heard the Liberal Democrat spokesman talk about Mickey Mouse income tax policies in the form of a 4p increase in the basic rate of income tax. All taxpayers should understand that the Liberal Democrat party is now a high-tax party flying the flag of higher income taxes. I should like to know what is the Conservative party's policy, too, because they are hiding behind an attack machine instead of putting forward coherent policies.

Paul Flynn: When can we discuss the great puzzle whereby the Government's 40 per cent. increase in spending on the health service has led to an increase in activity—operations and so on—of a mere 5 per cent.? Is one possible explanation the fact that the bill for drugs in the health service has increased by 50 per cent. in the past three years without any corresponding increase in the effectiveness of those drugs? Can we have a conversation about the fact that the big pharmaceutical companies are probably ripping off patients and taxpayers?

Peter Hain: I am not sure whether my hon. Friend is asking for another conversation or for a debate, but I am sure that the Secretary of State for Health will want to study his comments carefully. My hon. Friend may have seen his excellent article in The Daily Telegraph earlier this week, in which he comprehensively rebutted the charge that is being made by the Conservatives—although not, I am sure, by my hon. Friend—that all the public investment is not producing better results. The truth is that the record investment that is going into our health service means that waiting times for elective surgery are coming down increasingly fast, delivering people from the pain that they suffered, year after year, under the Conservatives. We will continue to put that money in and make reforms to ensure that we deliver a first-class service that is free to patients and to those in pain—a Labour-originated and Labour-modernised national health service.

George Young: The Leader of the House confirmed that, for reasons about which we can only speculate, we will not have a Second Reading debate on the Bill on top-up fees before Christmas. It follows that there must be a vacant day in the business of the House. Why, therefore, is the Leader of the House so resistant to calls from Members on both sides of the House for a debate on the Audit Commission report, which concerns a matter that affects all our constituents and makes recommendations to the Government on short-term changes? Consultations on next year's rate support grant statement are under way. The Leader of the House said a moment ago that he wants to find out about the Opposition's policy: such a debate would give him that opportunity.

Peter Hain: There is no vacant day. There are two Second Reading slots before Christmas, one of which, as I announced, will be filled by the debate on the Child Trust Fund Bill—a very important measure that will bring a minimum of £250 and up to £500 of assets to children born in this country. It is important that the Bill goes through quickly and gets early Royal Assent so that its provisions can be implemented as speedily as possible.
	I hope that the right hon. Gentleman agrees that the other Bill to get its Second Reading concerns an urgent matter—although some of the comments by Conservative Members, including his leader, make that rather doubtful. It will toughen up our asylum laws even further by tackling the loopholes that are being exploited by people traffickers, illegal migrants, and the criminal gangs who are sometimes behind them.
	We are introducing those two urgent Bills before Christmas. The higher education funding Bill will be introduced in due course, when we are ready to do so.

Huw Irranca-Davies: My right hon. Friend knows that lifting Crown immunity from prosecution is notoriously complex and requires cross-departmental authority. I have received reassurances in the past six months that the Government are minded to tackle that important issue. It is especially important for the Wynne family in my constituency who regard Crown immunity from prosecution as a smokescreen that covers up deficiencies in health and safety and management at the Royal Mint in Llantrisant. If that proposal does not appear in the measures that are in the Library to which my right hon. Friend referred, what assurances will he give that the Government will move rapidly to ensure that Crown immunity from prosecution is no longer used to hide deficiencies in health and safety that can lead to fatalities in Crown estate properties?

Peter Hain: I understand that the matter involves one of my hon. Friend's constituents, so it is therefore proper for him to draw it to the House's attention and seek a way in which to address it. The relevant Ministers and I will study his points carefully. Draft legislation is due to be introduced and discussed in the House and, during that pre-legislative scrutiny, he will have the opportunity to ascertain whether the plight and problem that he identified can be tackled in a better way than through the Government's proposals.

John Redwood: Now that the Government no longer have a friend to ring, they ask the audience to solve the nation's problems. May we have an early statement about the Government's side of the big conversation? How much money does the Leader of the House believe that the Labour party will make out of the electronic messaging? Could it be a case of rip-off communications from a rip-off Government?

Peter Hain: No.

Clive Betts: May I echo the calls for an early debate on the Audit Commission report? I hope that we could organise it so that we get away from the narrow party political point scoring of Conservative Members and consider the fundamental flaw in local government finance and indeed, in local democracy. For every £4 local government spends, it raises only £1. A properly agreed 1 per cent. increase in a council's expenditure can lead to a 4 per cent. rise in council tax. That is obviously a fundamental flaw in the system. May we have an early opportunity to consider the problem and, I hope, find redress?

Peter Hain: I understand my hon. Friend's point about gearing in local government finance. He was a distinguished local government leader in Sheffield and knows a lot about such matters. The Deputy Prime Minister will want to listen carefully to his points and ascertain whether they should be tackled through a debate or in some other way. The Audit Commission report is an important document and the Government's review will be reported to the House. There will be a proper opportunity to discuss it then.

Michael Jack: The Leader of the House has confirmed that the House's opinion of top-up fees will not be asked. In the light of the Prime Minister's desire to listen and the fact that 150 Labour Members of Parliament disagree with the policy, as do Her Majesty's Opposition as well as the Liberal Democrats and members of other parties, what steps will the right hon. Gentleman take to ensure adequate time—a minimum of two days—for a full debate on Second Reading of the higher education Bill? During the Christmas recess, will he give consideration to ensuring that an appropriate time for debate is provided so that all voices are heard on the matter?

Peter Hain: The Secretary of State for Education and Skills reported on the matter to the House only yesterday in a full debate. The right hon. Gentleman can press Conservative Front-Bench Members to hold an Opposition day debate on the subject. There will be a full debate on Second Reading, as is normal. However, we have set out our proposals to deal with the long-term problem of the deficits in higher education despite record investment. What are the Conservative proposals? The Liberal Democrats simply want to increase taxes, but they want to do that for everything. Conservative Front-Bench Members want a quarter of a million fewer students in our universities. What will that do for the prospects of the best knowledge-based economy in the world, which is the Government's objective? How will we achieve wider access and social justice for students, including some from my constituency, who are on low incomes? We are grappling with those issues and making proposals. The right hon. Gentleman should persuade Conservative Front-Bench Members to engage genuinely in a debate about serious policy instead of indulging in opportunistic sloganising and hypocrisy.

Julie Morgan: In general, I support the change of hours in the House. However, what impact have the new hours had on the catering service?

Peter Hain: It is interesting to consider what has happened since the new hours were introduced. As I reported last week, according to the House authorities, catering income has increased by 16 per cent. when compared with the same period last year. The issue about catering services is getting mixed up with that about the hours, but it is proper to deal with the huge subsidy for catering in the House and the Catering Committee is trying to do that. My hon. Friend's view is different from that of my hon. Friend the Member for Halifax (Mrs. Mahon) who opposes the change in hours. I have to weigh up the interplay of forces and divisions when deciding how to progress.

Adrian Flook: The south-west is bottom of the league in the amount of support grant that it receives per head, despite the fact that it is one of the most generous regions in contributing to the Treasury's coffers. Surely, to quote the Leader of the House, "That is not fair". May we have a debate on the way in which the rate support grant has become nothing more than the Treasury's stealth tax-raising powers?

Peter Hain: That is a ridiculous statement. Like all of us, the hon. Gentleman is worried about council tax levels, which the Minister for Local Government, Regional Governance and Fire is considering in his review. He will take the Audit Commission report into account. I should be interested to hear practical suggestions from Conservative Members. Do they want to raise extra taxes so that central Government provide more finance for local authorities, as the Liberal Democrats propose? Have they other alternatives? We are committed to high quality public services and that is why increases in local authority funding have been real-terms increases year after year, compared with real-terms cuts under the Conservatives.

Harry Barnes: If we had a debate on the Audit Commission report on council tax, it would give some of us an opportunity to point out that the major gerrymandering and fiddling in council tax measures arise from the Local Government Finance Act 1988, which introduced the poll tax that was transformed into the council tax. May we have a full day's debate on the current local government finance settlement? The Audit Commission report could be raised during such a discussion. A full day's debate, which was not chopped by statements, would give a good number of hon. Members a reasonable opportunity to contribute to the deliberations.

David Cameron: rose—

Peter Hain: I am grateful for the chance to reply to my hon. Friend. [Interruption.] I think that the hon. Member for Witney (Mr. Cameron) said that I might give better answers before I was asked the questions.
	I say to my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) that since 1997, there has been a real-terms increase in grant to local government of 25 per cent. compared with a real-terms cut of 7 per cent. during the last four years of Conservative government. The idea that we have not generously given extra support to local authorities is not true. However, my hon. Friend makes good points about the previous Government's rigging of the local government settlements. I remember when I was an unsuccessful Labour candidate for Putney in Wandsworth, the Thatcherite Government dished out lots of money from central funds to keep rates, the poll tax and the council tax low in Conservative-controlled Wandsworth. We are seeking to introduce a much fairer system.

David Cameron: Given the Prime Minister's occasional tendency to say one thing and mean something ever so slightly different, may we have a clear statement about whether the Bill that deals with top-up fees is an issue of confidence for the Government? Are they saying that if the Bill were lost on Second Reading, the Prime Minister would resign?

Peter Hain: The Prime Minister made it crystal clear yesterday that this is an important matter for the country and, therefore, for the Government, for him and for the House. We seek to tackle the funding gap that will arise in universities. The Conservative party, including the hon. Gentleman, is signally failing to acknowledge that gap because it does not care about the future of universities; they left them in a near-bankrupt situation. We seek to address that gap, widen access, increase social justice and enable more low-income students to go to universities, so that we can become the kind of economy that depends on high knowledge and high skills, and compete more effectively in the world. That is our objective: what is the hon. Gentleman's policy?

Richard Younger-Ross: I hope that when the Leader of the House has his big conversation he listens more than he is listening to the House today. He has heard argument from all quarters for a debate on council tax, and he is not listening. I hope that he will reconsider and that there will, at least, be a debate on that important issue in the new year.
	In the meantime, I urge the right hon. Gentleman to ask the Minister for Local Government, Regional Governance and Fire to come to the House to make a statement on the Audit Commission's report. He went to Devon county council, spoke to councillors, business men, pensioners and residents and told them that the council tax rise was all the county's fault. He came to the House and told Members from Devon and the south-west that it was down to the county council to decide the council tax rise. The Audit Commission's report clearly states that that is not the case. When will the Minister come to the House and put the record straight?

Peter Hain: Obviously the Minister will want to listen carefully to the hon. Gentleman's point. Turning to his party's policy on this matter, which needs to be clarified, I can tell the House that a briefing note entitled, "Lines and ideas for Monday's press conference", discusses increases in local income tax as high as 6p and says:
	"However, we don't want to be drawn extensively into this!"
	We should be told exactly what the Liberal Democrat policy is: sky-high income taxes instead of fair taxes and fair local provision.

Alistair Burt: I thank the Leader of the House for twice referring to my colleagues on the shadow Front Bench as an attack machine. We have been after that endorsement for quite some time, and it would be churlish not to acknowledge his contribution to our reaching our first objective.
	May we have an urgent debate on rural public transport? Already this week my constituents have suffered a number of strategic bus route cuts and face the threat of parents being asked to pay for their children to be taken to school. Whatever solutions to the problem of rural public transport the Government are producing, they are certainly not working, and if the right hon. Gentleman wants a conversation with my constituents on that, they are ready to have one with him.

Peter Hain: The press reports on the draft school transport Bill were completely misfounded and erroneous. The Secretary of State for Education and Skills wants to set up a series of pilot schemes that enable local authorities better to provide local school transport for a range of pupils, to reduce peak-hour traffic congestion, to improve pupil safety and to deal with other situations that Church schools, for example, are concerned about. The hon. Gentleman will have a chance to contribute to that discussion when it is subject to pre-legislative scrutiny, as it is intended to be next year, and I hope that he will do so.
	I hope that the hon. Gentleman will consider the detail of the situation that we are trying to tackle, which is a series of anomalies in which local authorities are not able to provide a flexible range of bus services, as we believe they should, to help pupils to get to school more safely, to take them out of the cars in which their parents tend to bring them, to put them on buses and so to relieve traffic congestion.

John Wilkinson: In view of the call by the German Chancellor and the French Defence Minister for the resumption of European arms sales to the People's Republic of China, which have been embargoed since the Tiananmen square massacre, and rightly so in view of the continued repression in Tibet, human rights abuses in the People's Republic and sabre rattling against Taiwan, can the Foreign Secretary come to the House next week and make a statement that the Government will, at the European Foreign Ministers Council, veto any such suggestion, because if it were acceded to this request would lead to the European Union becoming a friend of the great dictators?

Peter Hain: The Foreign Secretary will, of course, address the House next week, and he holds himself accountable to the House at every opportunity. On the question of arms sales to China or any other country, I point out to the House that after all the shenanigans and scandals of the last Conservative Government on this matter, we were responsible for introducing a strict code of practice that regulates arms exports and makes sure that they cannot be used for internal oppression or external aggression. In addition, and this is directly relevant to the hon. Gentleman's question, we were responsible for ensuring that much the same code of conduct was adopted by the EU, so we can proudly hold our heads high, knowing that we put defence trade on a much more equitable basis that respects human rights, rather than selling any arms to any country that wants to buy them, as tended to be the practice under the Government whom the hon. Gentleman supported.

Points of Order

Paul Tyler: rose—

Mr. Speaker: Order. Let me deal with a reply to a point of order that was made yesterday.
	Yesterday, at column 520 of Hansard, the right hon. Member for Bracknell (Mr. Mackay) made a point of order about remarks made, on an intervention, by the hon. Member for Ilford, South (Mike Gapes). I undertook to check Hansard and come back to the House if it seemed necessary to do so.
	It seems clear that the hon. Member for Ilford, South gave an incorrect year for the quotation which he read to the House. It would have been helpful, to me and to the House, if as a matter of courtesy he had acknowledged the mistake as soon as it was pointed out.
	More importantly, I understand that the hon. Gentleman subsequently approached the Officials Box to talk to the civil servants there. I want to make it clear, as my predecessors have done, that the Box is provided solely for officials of Government Departments supporting Ministers in questions or debates. Civil servants using the Box must not take advantage of their position in the Chamber to brief Back Benchers, and Members should not give them any encouragement to break this rule.
	Let me add this: the admittance of civil servants into the Box is by my permission. I shall not hesitate to rescind the privilege of any official to attend this Chamber in the Box if I believe that any of the rules that I have just set out have not been followed.

Mike Gapes: rose—

Paul Tyler: On a separate point of order, Mr. Speaker.

Mr. Speaker: I shall call the hon. Member for Ilford, South first.

Mike Gapes: May I apologise to you and to the House, Mr. Speaker? Yesterday, I had a quote that was entirely accurate except that, through a typographical error, it said 1998, not 1988. My intervention was made on the basis of that error, for which I apologise. I tried to check the exact date when I heard the Secretary of State's intervention. At that point, I was not clear about whether it was 1988 or 1998, which is why, in error, I approached the Box. I apologise again to you for that error, Mr. Speaker. Certainly it was not my intention to mislead the House, and I apologise to the hon. Member for South Suffolk (Mr. Yeo) if I, while accurately quoting what he said under a Conservative Government, gave the impression that he had said it under a Labour Government.

Mr. Speaker: I accept the hon. Gentleman's statement, and the matter is now ended.

Paul Tyler: On a point of order, Mr. Speaker. On a separate matter, I want to apologise to you and the House. Quite uncharacteristically, I hope, I protested volubly a few minutes ago, when the Leader of the House, no doubt entirely inadvertently, misled the House as to the nature of my party's policy on local income tax. He suggested that there was a paper saying that the Institute for Fiscal Studies had said that the tax would be in the region of 6p in the pound; it is in fact less than 4p in the pound. I am glad to have this opportunity to clarify the matter.

Mr. Speaker: I will not be drawn into that matter.

Henry Bellingham: On a point of order, Mr. Speaker. In today's Order Paper there is notice of a written ministerial statement on employers' liability compulsory insurance by the Secretary of State for Work and Pensions. A year ago, the Chancellor announced an inquiry into the crisis facing many thousands of businesses as a result of the acute increase in public and employers' liability insurance premiums. Surely, on the day that such an important report emerges, there should be an oral statement.
	As it is, we get a written statement sneaked out into the Library at 11.58 am, so Members who were sitting through questions from 11.30 am would not have had a chance to see that important report had they stayed in the Chamber. They may have wanted to comment on the report or make inquiries of Ministers during today's debate. Surely if Ministers are to make written statements, they should put them in the Library at the earliest possible stage.

Mr. Speaker: I understand that the statement was received by the Library at 11.58 am. I look to Ministers to ensure that written statements are delivered to the Library promptly.

Andrew Robathan: On a point of order, Mr. Speaker. I seek your guidance on a matter that has arisen this morning, otherwise I would have given you prior notice. At 11 o'clock, the Standards and Privileges Committee published its first report of the 2003–04 Session. I am concerned about the serious allegations made in a newspaper that a Member of this House may have behaved treasonably. In the report, Sir Philip Mawer writes:
	"It must be a shared concern of the Committee and of any Commissioner that a Member should not be able to block the investigation of a complaint under the processes approved by the House simply by threatening, or starting, a libel action. . . . If there appears to be any delay by Mr Galloway in pursuing legal proceedings, I shall seek further direction from the Committee."
	Is there anything you can do, Mr. Speaker, to ensure that the work of Officers of the House are not obstructed?

Mr. Speaker: That is a matter for the Commissioner and the Committee.

Andrew Turner: On a point of order, Mr. Speaker. On 22 and 29 October in Prime Minister's Question Time, the Prime Minister said that certain information was given to him and to the Taisoeach by General de Chastelain. I tabled three questions about the Prime Minister's statements to try to elicit further information, and when the Prime Minister replied on 6 November he referred straight back to his statement on 29 October. Can you render any assistance in obtaining proper answers from the Prime Minister and other Ministers to parliamentary questions?

Mr. Speaker: The hon. Gentleman should seek advice from the Table Office. The quality of answers given by Ministers is not a matter for me.

BILL PRESENTED

Armed Forces (Pensions and Compensation)

Mr. Secretary Hoon, supported by the Prime Minister, Mr. Secretary Prescott, Mr. Chancellor of the Exchequer, Mr. Secretary Straw, Mr. Secretary Blunkett, Mr. Secretary Smith, Mr. Adam Ingram and Mr. David Lammy, presented a Bill to make new provision for establishing pension and compensation schemes for the armed or reserve forces; to amend the Pensions Appeal Tribunals Act 1943; to provide for the transfer of the property, rights and liabilities of the Royal Patriotic Fund Corporation to a registered charity; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Monday 8 December, and to be printed. Explanatory notes to be printed [Bill 10]. Orders of the Day

Debate on the Address
	 — 
	[Sixth Day]

Order read for resuming adjourned debate on Question [26 November],
	That an humble Address be presented to her Majesty, as follows:
	Most Gracious Sovereign,
	We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which your Majesty has addressed to both Houses of Parliament—[Mr. McFall].
	Question again proposed.

The Economy

Mr. Speaker: I inform the House that I have selected for debate the amendment in the name of the Leader of the Opposition. Standing Order No. 33 provides that on the last day of the debate on the motion for an address to Her Majesty the House may also vote on a second amendment selected by the Speaker. I have selected the amendment in the name of the leader of the Liberal Democrat party for that purpose. The vote on that amendment will take place at the end of the debate after the amendment in the name of the Leader of the Opposition has been disposed of.

Oliver Letwin: I beg to move, as an Amendment to the Address, at end add—
	'But regret that the Gracious Speech contains no measures to provide fundamental reform of public services or to reduce the level of waste in government; condemn the absence of proposals to restore the incentive to save, which has been eroded by the vast growth in means testing; deplore the absence of sufficient measures to avert the pensions crisis; further regret that the Gracious Speech makes no reference to the need to establish a more transparent and coherent fiscal structure; further condemn the absence of measures to fulfil the Government's pledge to improve the competitiveness of the British economy and the rate of productivity growth; note that rail delays have doubled and traffic congestion has increased under this Government, and that there are no measures in the Gracious Speech adequately to address the Government's failure to tackle these problems, which are damaging competitiveness and leading to reduced choice for the travelling public; further condemn the failure of a draft Bill to indicate what the powers of any regional assembly would be, even though proposals for local government reorganisation have been published; and believe that the Government's proposals to restrict the right to buy will frustrate the legitimate aspirations of tenants to own their homes.'.
	Within the general sphere of economic affairs, there are six Bills and two draft Bills. Before discussing them, I draw attention for almost the last time to the investment banking interests listed under my name in the Register of Members' Interests. I stand before the House a poorer but happier man.
	I am glad to be able to tell hon. Members that we start with broadly positive attitudes to each of the six Bills. We are enthusiastic about the central innovation contained in the Companies Audit and Investigations and Community Enterprise Bill. The voluntary sector is the first sector: a foundation of everything we value in human society. Both the state and the market are essentially co-operative ventures; neither could be sustained without an active sense of the common good. We unreservedly welcome the evolution of new forms of association, which foster the social entrepreneurs who can transform whole neighbourhoods.
	I also welcome the Bill on civil partnerships. As my right hon. and learned Friend the Leader of the Opposition said, it addresses real grievances. I am personally delighted that there will be a free vote, on this side of the House at least. I shall vote in favour of the Bill.
	As far as the provisions and proposals on baby bonds, disabilities and employment relations are concerned, we will enter into constructive dialogue with the Government in Committee, although I should say that we do not regard child trust funds as an adequate substitute for a proper lifetime savings account, and we shall watch closely for any unnecessary regulatory burdens on small and medium-sized business emerging from disability and employment legislation.
	The energy Bill raises significant technical, accounting and environmental issues that we shall want to scrutinise. We share the aims, although we are not wholly convinced about the methods, of the pensions Bill. The fact that this Bill is now being introduced by the Government is, as my right hon. Friend Lord Forsyth has said in the other place, faintly reminiscent of the arsonist appearing with the fire extinguisher. We have to be careful that the arsonist does not light another fire. My hon. Friend the Member for Havant (Mr. Willetts), the shadow Secretary of State for Work and Pensions, who is an acknowledged guru, will have more to say about the need for some imaginative and lateral thinking in this area. The requirement for full funding of company pension schemes before wind-up is in itself admirable. However, I am sure that the Chancellor will share our desire to avoid a situation in which this becomes a cause of reduction in the number of company schemes. These, too, are issues we shall need to discuss in Committee.
	I suppose that I should congratulate the Chancellor on keeping the draft Bill for a euro referendum just that: a draft. For our part, we would have preferred to see the officials doing something more useful with their time, but I suppose that if it gives the Prime Minister an executive toy to play with on his desk, that may be a small price to pay for avoiding any misguided attempt by the Government to do anything about the euro.
	Whatever the merits of these Bills, the truth is that the solution to the Government's ills and to the principal problems of the country is not more legislation; it is better administration. I give the Chancellor full credit for the vast energy that he has displayed in his unremitting, passionate and sincere attempt to improve the administration of public services through a panoply of five-year plans, 10-year plans, targets, initiatives, public service agreements, centralised funding, performance monitoring, comprehensive spending reviews, terms and conditions, audits and best value regimes.
	It all began with the noblest and most proper sentiments. In 1998, the Chancellor told The Sun that
	"we must ruthlessly ensure we get value for money . . . we are determined you get value for every penny we spend".
	Alas, the dreams have turned to ashes. Today, the same newspaper contains evidence that the Chancellor's best value has meant no value. Comprehensive spending has meant comprehensive waste. We all remember Picketts Lock, the dome, and the Scottish Parliament building. We also remember the Passport and Records Agency fiasco, the armed forces asset management project and the renegotiation of a failed plan to link magistrates courts. [Interruption.] There is more. Members should contain themselves.

John McFall: Will the right hon. Gentleman give way?

Oliver Letwin: I would be delighted to give way. Will the hon. Gentleman explain whether the Select Committee on the Treasury, which he chairs, approves of the massive waste by the Government?

John McFall: The right hon. Gentleman mentioned newspapers. I note that yesterday he said that he would not talk about the financial services industry. He knows that members of the Select Committee and I are concerned about these issues. I would like a commitment that he will do an instant U-turn and tell the House that he will talk about financial services. I would like to know whether he will continue to talk about his target of 35 per cent. public spending for gross domestic product. Will he continue to talk on those issues?

Oliver Letwin: As a matter of fact, there are such experts on the Opposition Front Bench on that subject that I do not intend to speak about it. The hon. Gentleman may be aware that last night I deprived him of the fun that he was intending to have on that subject.
	According to IT specialists—the hon. Gentleman ought to attend to this—£1.5 billion of spending on IT contracts has been wasted. Perhaps his Committee will look into that, because it has not been a very good record for a Chancellor who promised value for money.
	It is not just a matter of projects that have gone wrong. There is also the question of squandering money on an ever-expanding bureaucracy. Why have the Prime Minister's office costs gone up by over £6 million since 1997? Why do Health Ministers' offices cost 70 per cent. more since 1997? Why has the Cabinet Office declared an increase in taxi fares of 1,000 per cent? I do not like paying the congestion charge either, but is not that taking it a bit far? Why have 1,422 staff been added to the payroll of the Department of Trade and Industry, when the Chancellor himself agrees that 500 of them are redundant?

George Foulkes: Will the right hon. Gentleman give way?

Oliver Letwin: I will give way to the right hon. Gentleman. Perhaps he can explain why more than 1,400 staff have been added to the Department of Trade and Industry payroll.

George Foulkes: I am here to ask questions, not answer them. I want the right hon. Gentleman to answer the question from my hon. Friend the Member for Dumbarton (Mr. McFall) that he avoided answering. The shadow Chancellor wrote in the Financial Times on—I had better get the date right—17 May 2001:
	"We would like to head downwards to 35 per cent of GDP. It is 190 per cent realistic to cut spending growth this way."
	Does the right hon. Gentleman still adhere to that—yes or no?

Oliver Letwin: If that was the question, I apologise for not having understood in the least what the hon. Member for Dumbarton (Mr. McFall) was trying to say. We are absolutely clear that we would like to reduce the burden of public expenditure and the level of tax compared with GDP, because we believe that a low-tax economy is a prosperous economy. We will stick with that.

George Foulkes: Will the right hon. Gentleman give way?

Oliver Letwin: No. I have answered the right hon. Gentleman's question.
	Why have the Government spent £882,351 renaming Government Departments and providing them with new logos? Why did the Ministry of Defence spend £8 million in 2002 on newspapers and magazines?

David Wright: Will the right hon. Gentleman give way?

Oliver Letwin: I will in a moment.
	Why did the NHS spend nearly £900,000 on the production and distribution of a magazine that was issued 10 times in a year but managed to sell only 22 copies of each edition? Why was NHS money in Wolverhampton spent on "empathy bellies", so that young men could feel what it was like to be pregnant? Why has the Department for Education and Skills spent over £650 million on truancy and unruly behaviour initiatives since 1997, yet seen truancy increase by 17 per cent?
	The truth is that, as my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) so brilliantly exposed last Wednesday, the Chancellor has transformed the principle of open government into the principle of the open wallet.

George Foulkes: Will the right hon. Gentleman give way?

Oliver Letwin: I will not.
	I regret to say that the Chancellor has lost control over the element of public expenditure that is in principle most controllable: the cost of the Government's administration of itself.

David Wright: I thank the right hon. Gentleman for giving way. He is very generous in these matters. Dozens of people across the country will be interested in what he is saying. Does he consider the new deal for young people a bureaucratic waste of money?

Oliver Letwin: The view that Conservative Members take is that there is more to be gained by floating pensioners off the ghastly array of means-tested benefits that the Chancellor has proposed by raising the basic state pension in line with earnings, than by continuing with a new deal project that has been shown to be an expensive failure.

Several hon. Members: rose—

Oliver Letwin: I will continue, if hon. Members will forgive me.
	In many ways, the House should sympathise with the Chancellor's plight, because he is now beginning to experience the truth of the proposition put forward by his own chief economic adviser and his own permanent secretary:
	"It is easier to reduce revenue and increase expenditure than to do the reverse. So when things go wrong with the public finances it is difficult to put them right, particularly since it can take a long time even to recognise the problem".
	In the Supply estimates of March 1997, the Conservative Government asked Parliament to approve total spending on Government running costs in the succeeding year of £14.8 billion. In his first supplementary estimates, the Chancellor raised that figure by a modest £7 million—so far, so good.
	By November 1997, the Chancellor was already adding £89 million—not quite so good. In February 1998, he added a further £175 million—a total rise across the first year of the Labour Government of some £270 million—not particularly good at all. However, it was very moderate compared with what we have seen since.
	In March 2001, the Chancellor raised the cost limit on central Government administrative expenditure to £16.7 billion, an increase of 19 per cent. on the previous March, and then asked Parliament to approve an additional £763 million by the end of the year that he had not thought of at the beginning of the year. By today's standards, that was still very modest. In March this year, the Supply estimates allowed for £20.6 billion of Government administrative expenses and the additions—[Interruption.] The Chief Secretary to the Treasury, who is meant to be controlling these things, is yawning because he has been utterly asleep on the job. The additions in the two rounds of supplementary estimates are now running at something like £1.4 billion each year.

Geraint Davies: Will the right hon. Gentleman give way?

Oliver Letwin: I always welcome interventions from the hon. Gentleman. I will certainly give way. Would he like to explain why the Government added £1.4 billion to the supplementary estimates?

Geraint Davies: Is it not the case that the share of GDP spent by the Conservative Government in 1995-96—the figures are from the Library—was 42.5 per cent. and now it is only 39.7 per cent? The share of tax plus borrowing, borrowing being deferred tax, has also dropped by two points. Therefore, is it not the case that, if the right hon. Gentleman wanted to reduce public expenditure to 35 per cent. of GDP by slashing public services, he would be completely incompetent at it?

Oliver Letwin: I thought that I would be pleased to take the hon. Gentleman's intervention. I wonder whether he realises that if the Government had not added so much to central Government expenditure, in particular if they had not added £1.4 billion to their own costs in the middle of the year, the proportion of tax to GDP would be lower than it is at present. That is the point with which he must wrestle.
	To put that in a context that the Chancellor will be familiar with, he is adding the cost of four domes to the administrative overhead of government each year on purpose, and the cost of another two domes each year by mistake.

Martin O'Neill: Will the right hon. Gentleman give way?

Oliver Letwin: I will not take any more interventions for the moment. If the hon. Gentleman will forgive me, I want to make progress.
	I expect that, in a few minutes, the Chancellor will come to the Dispatch Box and tell the House that he has recognised the problem and now recognises the need to reduce the cost of bureaucracy, but I fear that he will find it a more difficult and a slower process than he anticipates, because he has created great engines of growth within the bureaucracy. With new regulations on business alone running at nearly 15 per working day, not to mention the array of targets, plans and initiatives, the dynamic of senior civil servants building careers out of increasing pyramids of subordinates to administer increasing pyramids of regulation is well entrenched. Once the wallet has been opened, closing it takes very considerable political will and very considerable ingenuity. I have no doubt that the Chancellor has the ingenuity. We shall see whether he has the will.
	If the only effect of that open-wallet policy were to establish a bizarre combination of a culture of control and a culture of waste, it would be sad for the hard-pressed taxpayer but it might just be bearable. Unfortunately, the squandering of taxpayers' money is just a by-product of the Chancellor's largesse. The real tragedy lies in the fact that huge sums of money spent on public services, which are not being wasted, are nevertheless being systematically mis-spent.
	This year, the Government are spending over £50 million of taxpayers' money every hour of every day. By 2005 under Labour, people will be working for the taxman until 9 June each year. Taxes have been increased 60 times since 1997 but, because the Chancellor has made the public services dance to the tune of bureaucracy, because the public services have huge structural deficiencies, and because the Chancellor has failed to provide real reform, the public services are failing to deliver. Since 1997, current Government spending has increased by close to 50 per cent. but public sector output has increased by only 15 per cent.

Steve Webb: The right hon. Gentleman mentioned structural deficiencies and talked about his policy of linking the pension to earnings. He is a very intelligent man and good with numbers. He will appreciate that the main way he will pay for his earnings-link policy will be by abolishing the new deal. That costs £600 million, £600 million, £600 million and £600 million in successive years, but his earnings-link policy will get more and more expensive each year. How will he fund a rising spending commitment with a flat-rate cut?

Oliver Letwin: Unlike some of the questions from Labour Members, that is a perfectly sensible question and there is a perfectly sensible answer to it. The other half of the cost of our policy in the first Parliament will be met, paradoxically and ironically, by the reduction in means-tested benefits that will be achieved by floating pensioners off means-tested benefits. The second and subsequent Parliaments do indeed require further funding. Part of that funding will also come from floating more and more pensioners off more and more means-tested benefits, giving them dignity and an incentive to save in retirement. We will come forward with detailed proposals about how, in those second and subsequent Parliaments, the remainder of those costs will be met well in time for the election. We can have an interesting debate with the hon. Gentleman. It would be nice if I thought that we could also have an interesting debate with the Labour party, which seems determined to make more and more pensioners dependent and to give fewer and fewer people an incentive to save. It is a tragedy for this country.

John Redwood: Given that the Chancellor taxed telephone companies and they crashed, and that he then taxed pension funds and they were driven to near bankruptcy, as a fellow home owner does my right hon. Friend fear that the Chancellor is now going to tax housing to the point where that is destroyed, too?

Oliver Letwin: My right hon. Friend is absolutely right in his suspicion that this is a Chancellor whose ingenuity in designing 60 additional taxes knows no bounds. There may be no limit to the number of things that he will in due course tax. However, I hope that we will see in the pre-Budget report and in the Budget that follows that even this Chancellor desists from what were mooted as plans to tax primary residences. That would be the death knell of this Government.
	In the NHS, where the Chancellor has said that
	"the consumer is not sovereign,"
	there are more administrators than beds. There are still nearly 1 million people on waiting lists and 24,000 more administrators not looking after them. As a consequence, although the Government's latest figures show—[Interruption.] The hon. Member for Glasgow, Cathcart (Mr. Harris) should attend to his colleagues who mentioned this matter previously. Although the Government's figures show that NHS expenditure has risen by 37 per cent. in real terms, output has increased by just 5 per cent.
	I hesitate to intrude on the private grief of the relationship between the Chancellor and the Prime Minister, but the Chancellor will be aware that the Prime Minister describes the input-output measure of productivity as "bizarre". The Prime Minister continues that it
	"takes no account of improvements in waiting times."
	However, a moment's pause for reflection will explain why the Chancellor, with his ruthless intellectual integrity, has not used the Prime Minister's argument. Assuming that demand from patients has not diminished, which it has not, how can waiting times in the NHS have decreased significantly across the years without the number of operations in the NHS increasing significantly across the same years? How can patients be got off the waiting list without being given operations? The only plausible explanations are that patients have been spending their life savings seeking faster operations in the private sector, or that waiting lists have somehow been manipulated, or both. In short, what is bizarre is not the productivity measure, but the admissions implicit in the Prime Minister's argument.
	The Prime Minister's argument, however, suffers from another, simpler deficiency: waiting times have not been coming down. According to the Government's latest figures, the average waiting time for NHS operations has gone up from 91 to 99 days. On the Prime Minister's logic, taking account of waiting times, we can presumably say that NHS output has increased by less than 5 per cent. after 37 per cent. more funding has been put into the system.
	I fear that other measures of performance in the public sector also give grounds for serious concern. Despite the fact that we have more police, more than 50 per cent. of police officers on a shift are delayed in the station and a crime is committed every five seconds. One in three children leave primary school unable to read, write and count properly. It is true that there are times when the Chancellor seems almost ready to acknowledge that central control can have adverse effects on overall efficiency, but he goes on to assert that central control is nevertheless needed to ensure consistent standards. That argument does not match the facts. The quality of local schools, hospitals and police forces varies widely from one area to the next. Hospital mortality figures show that patients are twice as likely to die in the worst-performing hospital in England as they are in the best.

Tom Harris: Will the right hon. Gentleman give way?

Oliver Letwin: It is very unlikely.
	In the 10 best local education authorities in the country, 60 per cent. of pupils obtain five good GCSE passes, whereas in the worst 10 half as many do. It was never meant to be like that. The Prime Minister knows that. He understands that public services desperately need real reform.

Tom Harris: Will the right hon. Gentleman give way?

Oliver Letwin: As the hon. Gentleman is so insistent I feel some pity for him. I hope that he can make a constructive contribution—if he does, it will be the first time in my experience.

Tom Harris: I am grateful for the graciousness with which the right hon. Gentleman has given way. In the spirit of helpfulness, it would be extremely useful if I were able to respond to inquiries from my constituents, who might wonder how much a pensioner would have to take to the private health service along with the voucher that a future Conservative Government would give. For example, if a pensioner in my constituency wanted a hip replacement operation, how much of her own money would she have to take to the private health service under the voucher scheme proposed by the Conservatives?

Oliver Letwin: Blow me down—the hon. Gentleman has made a constructive contribution to the debate. He has asked a perfectly reasonable question. The problem that pensioners face today is that they cannot choose a hospital within the NHS. [Hon. Members: "Answer the question."] I will come on to answer the hon. Gentleman's question directly. The problem that the pensioner faces in the NHS as run by the Chancellor and his acolytes, is that he or she is not able to choose a hospital. That pensioner is not sovereign; the bureaucrats are.
	Under our passport, that pensioner will be able to choose which NHS hospital to go to and the amount that he or she will pay for going there will be zero. The pensioner will receive treatment at NHS hospitals that is free at the point of care, as at present. Today, that pensioner may be spending his or her life savings on having an operation in the private sector, and when doing so the amount that he or she will receive from the taxpayer is zero. Under our proposals, that pensioner will get a subvention from the taxpayer broadly equal to the marginal costs that would otherwise be encountered in the NHS. That is a rational policy that the Government, under the Prime Minister, would adopt were it not for the fact that the Chancellor will not let them.
	Many in the House will remember the Prime Minister telling The Big Issue in 1997 that
	"the days when government shovelled out more money are just not going to happen any more",
	or the new year message in 2002 when the Prime Minister said that
	"we must be bold on reform, opening up public services to greater diversity of supply"—
	I know that Labour Members do not like listening to the Prime Minister, but bear with him for a moment—
	"consumer choice and flexibility of working, ending the 'one size fits all' idea of the past."
	Those are not my words; they are the Prime Minister's. Members might also remember the Prime Minister telling The Times two months ago:
	"It is a special responsibility to stake out the centre ground of British politics"—
	the ground that the hon. Member for Glasgow, Cathcart wants to avoid. The Prime Minister talked about
	"how to combine investment in our public services with genuine reform so that they become personalised services built around the individual."
	Unfortunately, although the Prime Minister understands the need for real reform, he has not been able to convince the Chancellor. The result is a tragedy of wasted opportunity, epitomised by the foundation hospitals fiasco. The Prime Minister and the Secretary of State for Health genuinely wanted hospitals to be set free from controls from the centre and the bureaucracy of star ratings, targets and inspections, but the Chancellor refused to relax the Treasury grip. Not only are many of the controls maintained, but new controls and costs are added.
	The Chancellor has made a colossal structural mistake. His recent utterances about reform serve only the purpose of masking that mistake; they do not remedy it. In the Queen's Speech, there should have been bold moves to turn the public services round so that they become responsive to their users rather than the bureaucracy—the very point I was making earlier. However, to do that—[Interruption.]

Mr. Deputy Speaker: Order. I am sorry to interrupt the right hon. Gentleman. The hon. Member for Brent, North (Mr. Gardiner) must know to behave better than that.

Oliver Letwin: I am grateful to you, Mr. Deputy Speaker, but to avoid any embarrassment on the part of the hon. Gentleman, I will give way to him.

Barry Gardiner: The right hon. Gentleman was gracious enough to say that the my hon. Friend the Member for Glasgow, Cathcart (Mr. Harris) asked a sensible question. What he failed to do was provide the answer. The question was: how much money would the pensioner have to contribute? The right hon. Gentleman said what the subvention would be, but he did not say how much the pensioner would have to contribute. Will he cast his mind back and inform the House what his policy is?

Oliver Letwin: I know from previous debates that the hon. Gentleman is intelligent, so I assume that he is merely being purposefully obtuse. My argument was perfectly clear. Currently, pensioners have a choice. They can receive free treatment in the NHS, or they can pay a large sum to receive treatment in the private sector. Under our proposals, pensioners will be able to receive free treatment in the NHS at no additional cost—zero cost. If pensioners wish, however, they will be able to receive treatment in the private sector at less cost to them than at present. The upshot is that, one way, pensioners do not gain or lose financially, and the other way, they gain financially. The point of the system is to create competition, contestability and efficiency. The Government are so signally failing to produce those things that they are managing to put 37 per cent. extra into the system to get 5 per cent. extra out. That is the characteristic of the colossal structural mistake that the Chancellor has made. As I have said, his recent utterances serve only the purpose of masking that mistake.
	There should have been bold moves to turn the public services round, but to do that the Chancellor would have to admit that the consumer has to be king, and he will not do that. In this Queen's Speech, there should have been effective proposals to rein in the tendency of Whitehall to regulate, plan and control, and to put a brake on the engine that drives the expansion of the burgeoning bureaucracy. However, to do that the Chancellor would have to admit that the culture of the open wallet and of total control have established themselves in Whitehall under this Government, and he will not do that.
	The Queen's Speech should have begun with an acknowledgment that the Government have taxed, spent, wasted and failed. It should have acknowledged that a fundamental change of direction is needed, but it is utterly unimaginable that the Chancellor would admit to any such thing, and without repentance there is no redemption. The challenge for the Government is to combine prosperity with real and fundamental reform of the public services, to offer value for money, to make public services accountable and attuned to local needs and to offer people real choice over their hospitals and schools and the kind of policing that they want. For six years the Prime Minister has promised such things, but he has been constrained by his Chancellor. The people of Britain should not have to wait for a general election in order to overcome those constraints and fulfil those ambitions, but I fear that that is exactly what they will have to do.

Gordon Brown: In welcoming the shadow Chancellor to his new post in this Queen's Speech debate, I should point out that he has made three astonishing admissions already. First, he has admitted that he would abolish the new deal because he considers it an expensive failure, a point to which I shall return. Secondly, he has admitted that he would reduce public spending to 35 per cent. of national income. That is an £80 billion cut in public expenditure, which would be the equivalent of wiping out most of the health service. Thirdly, he has admitted that under his proposals, the pensioner who has an operation in the private sector would have to pay several thousand pounds. [Interruption.] If I may, I shall give the right hon. Gentleman the figures. The cost would be £5,000 for a hip joint operation, £7,000 for a knee joint operation and £9,000 for a heart bypass. That is health care based on ability to pay, rather than on need.

Jonathan Djanogly: Will the right hon. Gentleman give way?

Gordon Brown: In a minute.
	I turn to the most remarkable aspect of this afternoon's debate. This is the debate on the economy—and industry. The right hon. Gentleman is not just the new shadow Chancellor; he also has the title of shadow Secretary of State for Economic Affairs. Yet not one mention has been made of the fact that we have had the lowest inflation rates for 40 years, the lowest interest rates for 40 years, the longest period of economic growth for 50 years, and more people in employment than at any time in our history. All this has happened under a Labour Government.
	The right hon. Gentleman fails to mention the economy because if we were to compare our record with his, he would have to admit that while he was an economic adviser in No. 10, under a Conservative Government interest rates went to 15 per cent., inflation rose to 10 per cent., 2 million jobs were lost, 1.5 million people had negative equity as a result of their policies, and taxes had to be raised 22 times simply to pay for their additional borrowing of £80 billion, contrary to every promise that they made during the 1992 general election. Perhaps most significant of all, if he talked about taxation he would have to admit to his one claim to fame: he claims to be one of the authors—indeed, one of the inspirers—of the poll tax. When we have these debates on taxation, perhaps he will explain to us why he said that the poll tax had to be abandoned not because it was wrong or unfair, but because it was
	"grotesquely mis-implemented because it should have been phased in over a long period of time."
	That is the qualification that the right hon. Gentleman brings when he speaks on financial and tax issues.

Andrew Turner: Now will the right hon. Gentleman give way?

Gordon Brown: I am very happy to give way. And perhaps the hon. Gentleman will explain how he will tell his constituents of the effect that an £80 billion cut in public expenditure would have on his hospitals and schools, and how many doctors, nurses and teachers would lose their jobs.

Andrew Turner: If that were our policy, we would of course have to explain it. The Chancellor needs to explain why the people in my constituency, for example, who live in modest bungalows and terraced houses are paying for private operations that they cannot get on the NHS, at the prices that he quoted and above, and why the number of such people has multiplied threefold since his party came to power.

Gordon Brown: I know precisely why there would not be more operations in the national health service if the hon. Gentleman's party were to implement a policy of cutting public expenditure. He says that if it were his party's policy to reduce public spending to 35 per cent. he might defend it, but what is its policy? The shadow Chancellor said in an interview:
	"There has to be a third guiding rule which has to do, over time, with reducing rather than increasing the tax take, or . . . not allowing it to climb".
	When he was shadow Chief Secretary, he said:
	"We would like to head downwards to 35 per cent of GDP. It is 190 per cent realistic to cut spending growth this way."
	And in case anybody thinks that the right hon. Gentleman has been misinterpreted, and that this matter should not form part of a debate on Conservative and Labour policies, I should point out that he had to write to the Financial Times after that interview, saying:
	"The story as written in the Financial Times is a perfectly accurate representation of comments made by me to the FT."
	In other words, his policy is to reduce public expenditure to 35 per cent. of GDP, which constitutes an £80 billion cut. I am now very happy to give way, as I said I would, to the hon. Member for Huntingdon (Mr. Djanogly).

Jonathan Djanogly: I thank the Chancellor for giving way. He mentions the low interest rate economy, but fails to mention that it has resulted in business not investing in the way he said it would. He also fails to mention that 300,000 jobs in manufacturing have gone. Perhaps he would care to explain the implications of his policies in that regard.

Gordon Brown: The hon. Gentleman attempts to talk down the British economy, but in the past few years it is the only economy that has avoided recession. America, Japan, Germany and France have been in recession, but Britain has continued to grow. Business investment has of course been affected in every part of the world, but in the United Kingdom such investment, as a share of national income, has risen under a Labour Government, partly as a result of our cuts in corporation tax and our changes in investment allowances.

Several hon. Members: rose—

John Redwood: Will the right hon. Gentleman give way?

Gordon Brown: I should be happy to give way to the right hon. Gentleman, who does speak on trade and industry matters, unlike the shadow Secretary of State for Economic Affairs. Perhaps he will explain what good it would do the national health service and other parts of our public services if we were to cut public expenditure to 35 per cent. of GDP.

John Redwood: There is no intention to cut public spending. Will the right hon. Gentleman confirm what Labour Back Benchers have been saying, which is that under his regime, there is a small reduction in the proportion of GDP going towards public spending? Does that show that he has been cutting public spending, or that the economy has been growing?

Gordon Brown: We were right to spend on the national health service; we were right to spend on education; we were right to spend on, and invest in, the transport infrastructure; and we were right to spend on more policing. It is therefore right that public expenditure as a share of national income has risen since 1997, and it is right that we invest in these vital services.

Stephen Dorrell: Will the right hon. Gentleman give way?

Gordon Brown: I shall give way in a minute to the right hon. Member for Charnwood (Mr. Dorrell), who is someone who says that he wishes to invest in the national health service. The question, however, that Conservative Members must answer is whether they are going to enter the next election promising that they will cut public expenditure to 35 per cent. of GDP—an £80 billion cut in public expenditure. They would then have to explain in every constituency in this country how many hospitals and schools would be affected, and how many teachers and nurses would be made redundant. I now give way to the former Health Secretary, who will perhaps defend the national health service from the Conservative Benches.

Stephen Dorrell: I am grateful to the Chancellor for giving way. He lists a number of things that he thinks he was right to have done. When he first announced his planned borrowing for the current financial year in the 2001 Budget, he said that he planned to borrow £10 billion. The City now believes that he will actually need to borrow £40 billion. Is that change in his plans right, or did it happen by accident?

Gordon Brown: It is right for Governments to borrow at a time of a world downturn. The right hon. Gentleman will know that the American deficit is in the order of 6 per cent., and that the German and French deficits are in the order of 4 per cent. [Interruption.] The American deficit is approximately 5 to 6 per cent.—far higher than ours will be or could be.
	So that the right hon. Gentleman is in no doubt, let me point out that spending on the war in Afghanistan and on the war on terror—both international and domestic—is approaching £2 billion so far. That was the right thing to do, even though that expenditure was incurred after the 2001 Budget. The House will also know that I set aside £3 billion to fund the cost of military operations in Iraq. I have made clear my resolve to ensure that our armed forces and security services are properly supported for whatever lies ahead. In addition, we have spent £250 million on reconstruction in Iraq, with a further £300 million having been committed. The total spent and committed so far for the war on terror and our operations in Iraq and Afghanistan is about £5.5 billion. I shall publish further updates on those figures, and further information, next week in the pre-Budget report—and I will be able to tell the House not only that we meet our fiscal rules, but that we will never get the economy into the situation that prevailed when the right hon. Gentleman was in the Cabinet, when public borrowing rose to £80 billion.

Peter Tapsell: On the subject of public borrowing, does the Chancellor accept that if he had not sold our gold reserves at $260 an ounce before the price went up to $400, he would have rather less to borrow?

Gordon Brown: I do not accept that at all. The problem was that the reserves should have been rebalanced years before we were in government. It should have been done under the Conservative Government, because to have properly balanced reserves—particularly, if I may say so, given the rise of the euro in recent months—is to the advantage of the British Exchequer and the British economy.

Jonathan Djanogly: rose—

Kevin Brennan: rose—

Mr. Deputy Speaker: Order. We can have only one hon. Member on his feet at a time—and when that is me, all other hon. Members must resume their seats.

Gordon Brown: There is never a debate when the Conservatives' enthusiasm for their European position does not shine through.

Richard Ottaway: rose—

Gordon Brown: I shall give way to the hon. Gentleman, but then I will have to make some progress, because we need to talk about the economy, especially as the shadow Chancellor failed to do so.

Richard Ottaway: May I turn the Chancellor's mind to the subject of productivity? He will know that in the five years to 1997, productivity was running at more than 2.5 per cent., whereas in the five years since 1997, it has been running at 1.5 per cent., in stark contrast to productivity in the United States, which is 3 per cent. Is that a result of the growth of the public sector or the growth in bureaucracy and red tape for business?

Gordon Brown: Productivity is rising above 2 per cent., and manufacturing productivity is in the order of 5 per cent. The only years in which productivity fell were under the Conservative Government—1980 and 1989—and the only years in which manufacturing productivity fell were 1980, 1995 and 1996. Our record on productivity is far better than the record of a Conservative Government who, at the same time as failing to raise productivity dramatically, lost the British economy millions of jobs. We are creating jobs.

John McFall: Will the Chancellor give way?

Gordon Brown: I shall give way to the Chairman of the Treasury Select Committee, because I believe we can have a debate about the economy.

John McFall: May I remind my right hon. Friend that he was imprecise with regard to the comments made by the shadow Chancellor, who is on record as saying that he was one of the 20 people who created the poll tax? May I have a message from the Chancellor about what I can tell my pensioners when I meet them as I walk down Dumbarton high street on a Saturday, about what the future would be like for them if public spending were 35 per cent. of GDP?

Gordon Brown: I was coming to the debate on the public services, and I think that people will realise that with that policy, it would be impossible to have 80,000 more nurses and 25,000 more doctors, or 90,000 more classroom assistants and 25,000 more teachers, or to build 120 hospital developments, repair 20,000 schools and double the amount of national health service equipment with the most advanced technology. Hon. Members would have to explain to their constituents that instead of hospitals being opened, hospitals would have to be closed, and that instead of nurses being hired, nurses would have to be sacked.

Jonathan Djanogly: rose—

Gordon Brown: It is time to make progress in what I have to say about the Government's policies, and how they compare with Opposition policies.

David Laws: Will the right hon. Gentleman give way?

Gordon Brown: I shall not give way any more now.
	There are 200,000 more jobs in the United Kingdom than there were a year ago. In the most recent quarter alone nearly 50,000 new jobs have been created. There are now almost 1.7 million more people in work since 1997, and since the beginning of 2001, 3 million jobs have been lost in America, 1.5 million in Japan and 1.5 million in Germany. It is to the credit of this Government's policies that half a million jobs have been created, not lost, in Britain during that period.
	The shadow Chancellor should take an interest in this matter, because in his constituency the unemployment rate is 0.8 per cent. as a result of a Labour Government.

David Laws: rose—

Gordon Brown: I am not giving way at the moment.
	The new Conservative leader, and now the shadow Chancellor too, have said that the new deal is an expensive failure. They have said that they would abolish it immediately. They would abolish the new deal for the under-25s, for the long-term unemployed and for lone parents; the only new deal that they would retain is the new deal for the over-50s—perhaps because they may have to use it themselves after the next election.

David Laws: Will the Chancellor give way?

Gordon Brown: I shall give way in a minute, but not now; I am making progress on the new deal.
	The new deal has proved—[Interruption.] I know that there are Conservative Members who know that the new deal has worked in their constituencies, that it gives people a better chance of getting jobs, and that the new deal for single parents saves the Government money rather than costing money, because it helps more people get to work.
	The Chairman of the Public Accounts Committee, who is a Conservative, has praised the new deal for young people—so why are the Conservatives so determined to abolish the new deal? Why are the ideology and dogma of the Conservative party now so extreme that their policy at the next election will be to abolish the new deal? May I suggest that they have learned nothing and forgotten nothing from the experience of the early 1990s, when at the very moment when unemployment was rising, the former shadow Chancellor, who is now the leader of the Conservative party, and was then the Employment Secretary, abolished the enterprise allowance scheme, the jobstart scheme, the jobshare programme and the employment rehabilitation service for disabled people? At every point when there is a choice to make, Conservatives are prepared to see people unemployed rather than help them get work. That is a major dividing line between our parties now, as we move towards an election.

Angela Eagle: I congratulate my right hon. Friend on the success of the new deal, which has virtually wiped out youth unemployment in my constituency. Has he any idea of what I can tell my constituents when they hear the shadow Chancellor refer to it as an expensive waste of time, even though in Wallasey it is giving new hope and opportunities to many of my constituents?

Gordon Brown: Even if only a few people in our constituencies had got jobs as a result of the new deal, it would still have been worth while, because it is a social investment as well as an economic investment—but the fact is that 2 million people are in or have been through the new deal, hundreds of thousands have got jobs as a result, and the new deal has done better in the regions where the highest unemployment had been the greatest cause of social problems.
	I cannot understand how a Conservative party leader can say that he is moving his party to the centre while repeating exactly the mistakes of the past, when the Conservatives made people unemployed and pulled away any help for them when they became redundant.

David Laws: rose—

Gordon Brown: I shall give way to the deputy Liberal economic affairs spokesman now.

David Laws: I am grateful to the Chancellor for giving way so graciously.
	On the key issue of public service reform, the right hon. Gentleman will be aware that there has been much speculation about whether there are divisions between the Prime Minister and himself on top-up tuition fees. So that we can be in no doubt, will he tell us specifically whether he supports variable top-up fees?

Gordon Brown: Yes, and if the hon. Gentleman would read my speeches and do his research, he would know that that is exactly the position. The difficulty, however, is that the Conservative proposition would mean not only that there would be no opportunities for unemployed people, because there would be no new deal, but that if the Conservatives took up the policy that they propose on tuition fees, 100,000 students who are already at university would not be there, and in total 250,000 students would be denied university places. How can the Conservative party claim to be a party of the centre, when it is pursuing extreme policies that would deny opportunities to thousands of people in constituencies throughout the country?
	The hon. Member for Yeovil (Mr. Laws) is supposed to be doing a study of the costings of Liberal party policy, so he may find it interesting to note that even after his proposed tax rise, there would still be a £14 billion gap in his spending plans. Perhaps he should listen to the cautionary words of the former Liberal Treasury spokesman, who said that it was not possible to make any more spending commitments because the commitments that the party had already made had virtually burst the bank. In every part of the country, the Liberals will be exposed for what they are—people who make promises that everybody knows they can never deliver. Now, if I give way to the hon. Member for Huntingdon, who has been waiting to enter the debate for some time, perhaps he can tell me precisely what the Conservative economic policy is.

Jonathan Djanogly: The Chancellor has spent some time explaining how so many jobs have been created through his various policies. What he has failed to say that is business is not creating the jobs, because people are being sacked here and jobs are being created in India. The public sector, the Chancellor and his Government are creating the jobs. If people were digging roads in the public sector in the 1930s, they are now sitting in town halls and Whitehall. How is the Chancellor going to help business to create jobs?

Gordon Brown: I would say that the hon. Gentleman is ranting about the matter. In the last six and a half years, 1.7 million jobs have been created in the economy. No other economy has such a record. Conservative Members are trying to suggest that every one of those 1.7 million jobs is somehow pen-pushing in the public sector. However, the vast majority of those jobs are in the private sector and the vast majority of jobs in the public sector are the thousands of nurses, teachers, classroom assistants, policemen and women—and it is about time the Opposition recognised that if this country is to have a health service that it can be proud of, they will have to vote for the extra moneys necessary to invest in it. That is why the 1p rise in national insurance should be supported.
	I was demonstrating that the Conservative party is pledged to abolish the new deal, while we wish to expand it, build on it and employ training pilots so that people can get the skills that they need. The Lambert report is published this morning, and help for university spin-off companies will be available so that new jobs in high-technology industries can be created. We shall reform the Employment Service so that it can do a better job of helping people who are hard to employ. None of that would be possible if we denied the Employment Service and the new deal the necessary moneys to help people get back to work and get the requisite skills, which is supposed to be the Conservative policy.
	Another Government policy is investing in the public services, and I have to tell Conservative Members that if we were to reduce public spending to 35 per cent. of gross domestic product, we would have to make many people in public services redundant. Furthermore, there is no doubt that over the past few years, what has kept the British economy moving is the symmetrical inflation target and the monetary policy pursued by the Bank of England. The credibility that has emerged from the Bank of England's work has led interest rates to be actively pushed down to the point at which it was necessary to keep the world economy and the British economy moving forward. It was also necessary to have fiscal policy to support monetary policy during that period. That is why a programme of cuts in public expenditure would have been the wrong thing for the British economy.
	Conservative Members do not want to engage in the issue of what is the right economic policy, and particularly the right macro-economic policy, for Britain. It is good that this country did not have to suffer from their policies over recent years. They refused to make the Bank of England independent. They never supported our symmetrical inflation target until it was too late. They refused to provide the fiscal boost that was appropriate for the economy and they would have abolished the new deal. Pursuing Conservative policies over recent years would doubtless have led to a repetition of the same boom-bust, stop-go policies of the past. Conservative policies would have put Britain into recession.

Helen Jones: As well as noting the dismissive attitude of Conservative Members to our position on public sector workers—they seem to dismiss them as not having real jobs—has my right hon. Friend made an estimate of the effect on the wider economy of making public sector employees redundant? Public sector workers would no longer pay taxes or contribute through buying goods and services.

Gordon Brown: My hon. Friend is right that public servants make a contribution not just to public services, but to the economy as a whole. She is also absolutely right that Conservative policy is to devalue the work of public servants. I see that the shadow Chief Secretary has just joined the debate. Let me quote what he said in an article in The Sunday Times on 10 March 2002:
	"The whole mentality in the public sector is to do as little as you can".
	I would be happy to give way if the hon. Member for Arundel and South Downs (Mr. Flight) would like to correct his statement. However, it seems to me that when we reach the next general election and we are explaining policies on the public services, if the hon. Gentleman makes such accusations against good public servants, including nurses, doctors, teachers and classroom assistants, and tells them that their mentality is to do as little as they can, we shall genuinely know the feelings of the Conservative party towards the public services of this country.
	The shadow Chancellor was good enough to admit that his policy was to provide vouchers to help people move into private health care services, but he refused to tell us how much money people would have to put up to enable them to receive the benefits of such treatment. I have here a pamphlet written several years ago by the shadow Chancellor and the right hon. Member for Wokingham (Mr. Redwood). It is a manifesto not just for vouchers in the NHS, but for charges all round within the NHS. It is a manifesto for private health insurance to be taken up, perhaps compulsorily, by many people, and for breaking up the NHS as we know it. I believe that the whole country will be looking to the shadow Chancellor as he formulates his plans for the future to see whether the Conservative party policy is not just for vouchers, but for charges, cuts, privatisation and the break-up of the NHS. That is undoubtedly the aim of the Conservative party.

Brian Mawhinney: rose—

Gordon Brown: I am sorry, but I have already given way many times.
	The Queen's Speech debate has already revealed much about the modern Conservative party. The Conservatives want to abolish the new deal, to cut public expenditure to 35 per cent. of national income—an £80 billion cut in public services—and to force a voucher system on the NHS, which would mean that health care would for many people be based on ability to pay rather than on need.

Oliver Letwin: Wrong again.

Gordon Brown: I gladly give way to the shadow Chancellor so that he can explain his plans.

Oliver Letwin: I am delighted that the Chancellor has given way. I tried to explain it earlier, but perhaps he was attending to his notes. It would be helpful if the Chancellor focused on one issue. Under our scheme every patient who seeks a hospital place in the NHS will receive that place free—as at present—but they will have choice. The Chancellor hopes to deny them that choice and he wants to prevent the Prime Minister from providing it. Will the Chancellor explain why he is so opposed to the choices of patients?

Gordon Brown: There is, and should be, choice for patients. Patient choice is being extended. However, the right hon. Gentleman's proposals—we welcome any debates on the subject in the House, because they will expose the Conservative party—would remove funds from the NHS and run down capacity that should be built up in the NHS. It achieves that in two ways. There is a deadweight cost for subsidising private health insurance through tax relief, which is at least £1 billion, and there is the additional cost of the vouchers themselves. Those deadweight costs, which apply before anyone who does not use private care benefits, amount to another £1 billion. How can the Conservatives say that the health service is safe in their hands when their fundamental proposal is to take several billion pounds out of the NHS and put it into private care? They do not want to build up capacity in the NHS even though we know that the average cost per operation in the NHS is only half that in the private sector. It is therefore more cost-effective to invest in the NHS.

Oliver Letwin: rose—

Gordon Brown: I happily give way so that the right hon. Gentleman can explain the full contents of his pamphlet for the privatisation of the health service.

Oliver Letwin: I was hoping that the Chancellor would tell us—it would help enormously in respect of the debate that he mentioned—whether he accepts that there is some sort of problem on some scale or other about putting 37 per cent. more into something and getting only 5 per cent. out. If there were a problem of that sort, could it be a reason for engaging in some sort of fundamental reform?

Gordon Brown: I am grateful to the right hon. Gentleman, but let me read out what has happened in the NHS over recent years. When we came to power, 11.5 million out-patients were treated, by comparison with 13 million now. In elective surgery, 4.4 million patients compares with 5.3 million now. The 11.6 million consultant episodes then contrasts with 12.8 million now. Ambulance services dealt with 3.5 million people when we came to power, as opposed to 4.9 million now. There were 473,000 magnetic resonance imaging scans, but 786,000 now. With ultra-sound scans, 4.8 million compares with 6.6 million. The 166,000 cataract operations have become—[Interruption.] Conservative Members do not like it, but it is the truth about what is happening in the NHS. Prescriptions of statin have increased from 4 million to 19 million. If the right hon. Gentleman is trying to suggest that that is not an improvement both in the capacity and the productivity of the national health service, he is making a terrible mistake and is indicting nurses, doctors and good public servants for what they do.

Oliver Letwin: rose—

Gordon Brown: I am happy to give way, but perhaps the right hon. Gentleman will now explain his proposals for privatisation of the health service.

Oliver Letwin: I am grateful to the Chancellor for giving way again. Of course I understand the therapeutic effects of reading out lists of that kind for his hon. Friends, but I beg him to enter serious debate about a matter that he says is serious, and we agree with him. Is there not a problem about putting that amount of money in and getting so little out? What is his proposal for curing that problem, if not to introduce choice, competition and contestability? He is in favour of those principles in the rest of the economy and society, so why does he think that they will not produce results in the national health service?

Gordon Brown: Let us talk about productivity between the different sectors. The cost of cataract removal under BUPA is £2,275; the NHS cost is £1,000. A hip replacement costs £8,000 under BUPA, but £4,500 under the NHS. The BUPA cost for a knee replacement is £9,650; the NHS cost is £4,800. A heart bypass costs £13,050 under BUPA; the NHS cost is £6,000. Let the right hon. Gentleman tell me which is more productive. Furthermore, administrative costs in BUPA and the private sector are three times the percentage of income compared with the NHS.
	Perhaps the shadow Chancellor can explain another avenue that is being tentatively explored by the Conservatives: charging. In principle, that could be extended to the point of universality. Can he explain that?

Hon. Members: Answer.

Mr. Deputy Speaker: Order. Has the Chancellor finished his speech?

Gordon Brown: Mr. Deputy Speaker, we know where the Conservatives stand. They would abolish the new deal, cut public spending to 35 per cent., privatise much of the national health service and introduce a system of vouchers and private health insurance that would deprive the NHS of billions. That is the vision of Britain that the Conservative party offers the country. That is why people want a Labour vision of stability, employment, growth, investment in public services and a commitment to a national health service free at the point of need. I commend our position to the House.

Vincent Cable: We have not heard much debate on the Queen's Speech, but there have been extensive exchanges about the achievements and failures of the British economy and its management. I am happy to join that debate, but in any intelligent discussion of British economic performance we must recognise from the outset that there have been achievements as well as failures and I acknowledge some of those achievements.
	We have had steady growth. There has been low inflation—as there has been in the rest of the industrial world—falling unemployment and rising employment, and a framework has been established for stable monetary policy. All those things are positive. However, just as it is dangerous to ignore the achievements, it is also dangerous to exaggerate them. The following comments were made in the recent past about the performance of the British economy:
	"the British economy is stronger than at any time since the war."—[Official Report, 15 March 1988; Vol. 129, c. 993.]
	"In Britain today we have more people in work than ever before in our history; they are better motivated than ever before, and their living standards have improved beyond recognition."—[Official Report, 14 March 1989; Vol. 149, c. 294.]
	Those comments were made not by the present Chancellor, but by Mr. Nigel Lawson shortly before he presided over the collapse of the 1980s boom. Like the present Chancellor, Nigel Lawson was an intelligent and eloquent man, but he is now generally regarded as a failure because he ignored the build-up of consumer credit and the asset bubble in the housing market that subsequently burst—conditions that are almost identical to those that currently prevail.

Kevin Brennan: Before the hon. Gentleman goes on with his impression of Private Frazer from "Dad's Army" and tells us that we are all doomed, will he say whether he recognises that one of the Government's great economic achievements is the national minimum wage? Does he support that?

Vincent Cable: I was the Liberal Democrat spokesman for trade and industry when the national minimum wage legislation went through. I supported it then and have done so constantly; indeed, I have argued that the minimum wage for younger workers was deficient—

Barry Gardiner: You were in the Labour party then.

Vincent Cable: I was not in the Labour party. I was the Liberal Democrat spokesman and I supported the national minimum wage and I continue to do so.
	A feature of Nigel Lawson's period as Chancellor was that—

Mr. Deputy Speaker: Order. May I point out to the hon. Gentleman that it is usual to refer to a Member of the other place as the noble Lord rather than his former name?

Vincent Cable: When the noble Lord was a Member of this place he made one significant achievement: he progressed reform of the tax system and greatly simplified it—something that the present Chancellor has done much to reverse. Indeed, I sense that in many ways the Chancellor's management style at the micro level bears a strong resemblance to the management style being practised at Stamford Bridge under its present manager, Signor Ranieri, who is affectionately referred to as "Tinkerman". The problem with tinkering, whether with economic policy or football, is that it works well at satisfactory periods, but when problems arise all the distortions and waste associated with tinkering come to light.
	Before I discuss the Government's record I want to say a few words to the Conservative spokesman. A week ago, the right hon. Gentleman gave an interview to a newspaper about his ambitions for his new office. In his characteristically charming way, he said:
	"I am extremely determined not to turn into a creep".
	I am sure that there is no danger of that. I think he was trying to make the point that he wanted to establish a track record for honesty and openness, so will he comment on a statement published by the Financial Times on Monday, following the interview that the Conservative leader gave about economic policy on "Breakfast with Frost"? The press statement said:
	"Michael Howard has insisted that there is no conflict between improving public services and cutting taxes, and claimed that the Conservatives' reform plans have received the blessing of the Financial Times . . . The Financial Times has not given such an endorsement. None of the Tories' plans identified significant net savings that would allow for tax cuts".
	Given the shadow Chancellor's comments on his tax policy today, I hope that he will quickly either apologise to the Financial Times or give us some serious clarification of that statement.
	I now turn to the Government's record. I want to address two central weaknesses: the first relates to the Budget and the second to imbalances in the private household sector.
	Next week, we shall hear the pre-Budget report and there will be an opportunity for detailed comment. The Liberal Democrats supported the increased resources that the Government have put into public services, especially the NHS, and we supported the tax measures that were necessary to deliver them. We continue to support those measures. We acknowledge that in many cases there has not been an output—the awful word that is applied to the public services—and that the money has often gone into raising wages and salaries for public service employees in health and education. Of course that is right, because it is necessary to attract and retain staff.

Barry Gardiner: On output, given that the number of scans is increasing and that there has been an increase in the number of early interventions made on patients, does the hon. Gentleman accept that it is not correct to measure output simply in terms of the operations that then need to be done? In fact, an operation is not needed if an early intervention has cured the patient. That is a shift in balance, so to use that measure of output is flawed.

Vincent Cable: That rather technical point would best be pursued on another occasion. To the extent to which I followed it, however, it seemed eminently sensible.

Brian Mawhinney: It would be churlish not to recognise that the Government have put more money into the health service in recent years than most hon. Members can remember. Funding has risen by 10 per cent. over the past four years and has produced an increase of 1.25 per cent. in finished consultant episodes, the technical benchmark. I was Minister of State in the Department of Health in the early 1990s. We increased the health budget by between 5 per cent. and 6 per cent. a year, roughly half what we have experienced under this Government, but finished consultant episodes rose by about 5 per cent. a year. In other words, productivity was about eight times what it is now. Will the hon. Gentleman explain why he thinks productivity has fallen so dramatically, even though funding has risen so significantly?

Vincent Cable: The simple answer is that there are too few staff. One of the more shocking statistics to emerge over the past few days is that, in the past financial year, the Government spent £1.2 billion on health service agency fees, with a premium of 20 per cent. However, the question that the right hon. Gentleman must answer is why that shortage existed in the first place. To their credit, although the Government have spent £5 billion on health service agency fees, they inherited a depleted staff. That is the benchmark against which we must operate.
	The key point is that a great deal of public expenditure is misdirected. The example that emerged this morning was that the NHS is paying hundreds of millions of pounds in excessive charges to drug companies as a result of lax procurement policies. Precisely the same problem exists in the Ministry of Defence. We learned last week that the Government are paying hundreds of millions of pounds in excessive commercial rents for property because senior civil servants refuse to accept redeployment to provincial cities, where they would be able to work much more cheaply and efficiently.
	The Queen's Speech contained a perfect example of proposed legislation—the Bill on identity cards—that will result in an enormous waste of public resources. I do not want to rehearse all the civil liberties arguments, but a sophisticated ID card system will require expenditure in the order of £3 billion.

George Foulkes: The hon. Gentleman is in danger of getting carried away with his own oratory, but it is easy for him to nitpick the proposals put forward by the Government, and even by the Tories. Is not it about time that he spelled out the proposals of the Liberal Democrat party? They deserve some scrutiny, as the money—let alone the compulsory cod liver oil—that his party proposes to give away to pensioners and students amounts to a £14 billion black hole. Is not it about time that he spelled out his party's policies, so that they can be subject to some real scrutiny?

Vincent Cable: I think that I am picking rather bigger creatures than nits. I would be happy to have a debate on the relative merits of higher or lower top-rate marginal tax, or of council tax as opposed to local income tax. Those are interesting matters, but it would help if Labour Members got away from the utterly puerile line of argument that we have heard in recent weeks from the Prime Minister. The imaginary figures that he has plucked out of the air are on the same intellectual level as the claims by the leader of the Tory party that the Prime Minister is, somehow or other, a leading light in the Campaign for Nuclear Disarmament. That level of political debate drags down the reputation of all hon. Members. We need to have a proper and serious debate about economic policy.
	I was introducing the matter of the very large costs associated with ID cards. Those costs are not simply financial. All hon. Members have dealt with the immigration and nationality directorate, and know that the Home Office is probably the most incompetent of all Government Departments. Implementing the ID card scheme will require a most sophisticated programme, and the Home Office will have to handle the matter. It has already failed in the delivery of IT systems that are less sophisticated than what will be required for the ID card scheme.
	Especially perverse is the introduction of a programme that is very costly and sophisticated at precisely the same time that the NHS is embarking on what it calls the biggest IT project on the planet. The Treasury should have been a little more observant, perhaps. The two projects will compete for the same systems engineers, and make the same demands on a vastly overstretched IT supply industry. Costs will be massively inflated as a result: the capacity is not there, and there is a total absence of anything remotely like planning.
	I know that the word "planning" may be regarded as dangerously left-wing in No. 10 Downing street, but it is required in the public sector. A great deal of money is being wasted in its absence.
	To respond directly to the right hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), I can tell him that my party is concerned with specific ways in which Government expenditure can be cut to finance priority public spending. The leader of my party said at our summer conference that we shall find £5 billion in cuts, and I am happy to endorse that.
	In case we are accused of being imprecise, I shall give a concrete example of that. For three or four years, I have shadowed the Department of Trade and Industry. That Department employs large numbers of civil servants, who spend large amounts of money. Increasingly, I came to share the view of most of the Department's clients that it is little more than a regulation factory. As a sideline, it runs various industrial assistance schemes whose benefits are entirely swallowed in overheads. Large areas of its functions could be dispensed with, with no great loss to the public or diminution in public service.

Oliver Letwin: indicated assent.

Vincent Cable: I see that the Conservative spokesman is nodding. I should be interested to hear whether he supports my proposal to abolish the Department of Trade and Industry.

Geraint Davies: Is the hon. Gentleman serious when he suggests that improving productivity in the NHS through investment in IT should be delayed for a few years because there are not enough consultants? Is that Liberal Democrat policy, given that we have heard today that US productivity is at its highest for 20 years because of the dividends accruing from investment in IT? What sort of proposal is that?

Vincent Cable: I was saying exactly the opposite. It is, of course, absolutely necessary that the NHS has an efficient IT system. That system must be successful, or the NHS will not function in the future. We fully support that. I was asking why we should not scrap the ID card proposal, and all the IT nonsense associated with it.

Geraint Davies: I was talking about the health service.

Vincent Cable: I am not sure that we can detain the House while one hon. Member catches up.
	I revert to the other major problem, which is that there are imbalances in the economy. Those imbalances were obvious in the 1980s, and are now reappearing. The Chancellor's great claim—which has been vindicated so far, and for which he deserves credit—is that the old economy of boom and bust has gone. However, it has reappeared in a new form. There is a massive boom in credit and debt expansion, and in the housing market.
	So far, that boom has proved to be sustainable, but the indicators are extremely worrying. That is not my judgment alone. The Governor of the Bank of England gave a warning six weeks ago, which he then partially retracted, and the Treasury's Mr. Ed Balls has also warned of the dangers that exist. The debt-to-personal-income ratio is three times what it was 20 years ago and, even with extremely low interest rates, the debt service ratio for households is now over 12 per cent., compared with 9 per cent. when the Government took office. House prices in relation to incomes are way beyond equilibrium levels, and will therefore fall. That is not my judgment, which is not important; it is the technical judgment of the Monetary Policy Committee.
	A very dangerously unstable position has developed, based on excessive and irresponsible lending by the banking system.
	Something is seriously wrong when a reputable bank, like the Royal Bank of Scotland, can send out a gold card with a £10,000 credit limit to a dog called Monty. The irony of the situation is that if Monty had wanted to invest £10,000 for his old age in the kennels, he would have had to bring in a financial adviser who would have spent an hour checking that the product was not being mis-sold. There is absolutely no restraint on excessive credit expansion. Indeed, in supermarkets like Homebase many of us are pursued by people with clipboards asking, "Will you take £5,000 worth of credit from our credit card company?" Is this a sensible, sustainable way to maintain the economy? Both sides would probably answer, "There is not a great deal we can do about it because we have a market economy".
	Rightly, we have a liberalised credit market and of course one cannot order banks and credit companies to do this or that. Nevertheless, surely the Chancellor should acknowledge publicly that there is a serious problem. He could start to take various steps. He should be talking to the Bank of England and the Financial Services Authority about whether it is possible, as already happens at an international level with the International Monetary Fund and the World Bank, to define what is sustainable private debt, to set out some objectives for the banks in terms of prudent loan-to-value ratios or income multiples and to name and shame banks that go beyond that level.
	The Government should be taking further measures. I cannot understand, and I suspect some Labour Members cannot either, why there is no consumer credit legislation in the Queen's Speech. It was in the Labour party manifesto. It has been promised for years to the Consumers Association and to the National Association of Citizens Advice Bureaux. The hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz) and other Labour Members have done admirable work establishing the severity of the debt problem among low-income families. We were promised legislation to deal with loan sharking and comparable behaviour, but it is not there. Nothing has happened.

Martin O'Neill: I think that the in some ways perhaps justifiably maligned Department of Trade and Industry is bringing out a White Paper on the subject next week. I imagine that that would be the precursor for legislation later, either in this Session or the next.

Vincent Cable: I sincerely hope that that is correct. The Department told me two years ago that it was bringing out a White Paper. It is taking a long time to write, but I hope that the hon. Gentleman is right and that this rectifies the problem.
	I remember three years ago debating with Treasury Ministers about the situation in the banking system. The Chancellor of the Exchequer produced an excellent report under a Mr. Cruickshank. Among other things it highlighted the fact that in the banking system there is a network monopoly, from which considerable excess charges have been earned and eventually passed on to households and business customers. There is a similar monopoly arrangement within the credit card system. The Government promised that they would introduce a pay-com system to deal with the problem. Nothing has happened. There is no legislation and nothing about it in the Queen's Speech. Where is it? Is the Chancellor afraid of the banks? Is he afraid to tackle them?
	In conclusion, I shall cover other items in the Queen's Speech. Like the right hon. Member for West Dorset (Mr. Letwin), I welcome the community enterprises Bill. As I understand it, it is designed to take forward the concept of mutuality and mutual ownership. Over the past two years there have been excellent private Member's Bills on the subject and I hope that this will take the matter further. Given that the Government have talked so much about new forms of ownership and mutuality, why are we still so underdeveloped, in relation even to bastions of shareholder capitalism like the United States, in developing credit unions? I suspect that much of that is due to the conservatism of the Treasury, but we shall see the legislation when it comes.

John Butterfill: Does the hon. Gentleman agree that given the Government's alleged support for mutuality, it is strange that the FSA is now proposing to introduce rules for the distribution of surplus mutual funds, which would mean the end of mutuality?

Vincent Cable: That is an extremely valuable point. Indeed, it was the Treasury's reluctance to safeguard those funds over the years that has inhibited mutuality so much. That was a helpful intervention, which I hope that Ministers have noted.
	As I understand it, we will be invited to support legislation to cement the understanding reached between the Confederation of British Industry and the Trades Union Congress on worker consultation. That would be desirable. In future it would not be possible to fire workers over the radio. Where is the legislation on corporate killing? It, too, was promised in the Labour party manifesto. It has been openly and strongly advocated by non-political bodies, such as the Law Society. The situation is hopelessly unsatisfactory: either companies that are guilty of gross negligence are charged trivial fines or some arbitrarily chosen individual is charged with manslaughter. The law is a complete mess and wholly unsatisfactory. Why is it that the Home Office, in its obsession with asylum seekers, has overlooked a piece of legislation which all parties agree is absolutely essential to safeguard the safety of workers?
	We shall probably support the Government on the referendum Bill in relation to Europe. Why now? The reason is that the Government have made it clear that they do not intend to act on it in this Parliament. It is an important initiative. It is important to sustain some of the confidence—[Interruption.] The Chancellor has indicated that he has to leave and I accept his apologies. We need some explanation of what is happening. A few years ago the Chancellor set up a Committee on which I sit—an all-party group chaired by the hon. Member for Huddersfield (Mr. Sheerman)—and we regularly interview members of the business community. They have made it clear to us that the groups of experts that they established to prepare the way for entry and to do the euro preparations are now being stood down because of uncertainty over the Government's intention in relation to monetary union. We want some reassurance from the Government that this process is not now hopelessly and terminally derailed.
	The final piece of legislation on which I wish to comment relates to tuition fees. It is the centrepiece of the Queen's Speech and has been debated at length in relation to its educational and political aspects. I should like to say a few words about the economic aspects. It has always struck me as odd that the Government keep asserting that students do not pay for their higher education. They already pay for it partly in maintenance. There is a simple idea in economics called opportunity cost. When an 18-year-old decides to go to college to study for a degree they sacrifice a full-time income. If an A-level student decides not to work as a clerk in a bank for three years, they are making a decision to sacrifice probably £50,000 worth of income over three years. In addition to the debts that they accrue from maintenance expenditure and will accrue from tuition fees, they sacrifice £50,000 worth of income. The investment of a cumulative total of about £80,000 by working-class and middle-income families is a major commitment. Most of the commitment is made on the assumption that when the student graduates they will enjoy the graduate premium—they will earn extra income. We already know, and knew even before the fee system came in, that many graduates do not have a premium; they have a negative premium. All arts students have a negative premium on their university education. Women who enter education courses have a negative premium. They make up the base of the future primary school teaching staff. The Government are talking about superimposing yet another deterrent to people entering the university system.

George Foulkes: I could argue with the hon. Gentleman about a whole range of the strange things that he has just said, but perhaps he can enlighten the House about why his colleagues—not just those in the Scottish Parliament, but members of the Scottish Executive—supported something for students in Scotland that is similar to the scheme that the Government are introducing; it is almost exactly the same in principle.

Vincent Cable: My Scottish colleagues behind me tell me that that is not even remotely correct. Of course, I know that our colleagues in Scotland were instrumental in the getting rid of up-front fees, which the Government intended to introduce.
	In conclusion, I simply want to develop the point by saying that, of course, there is some common ground between Liberal Democrats and the Government, in recognising that universities need additional funding. Of course, they do. The Conservatives have been silent on that point.

Alex Salmond: May I help the hon. Gentleman, since his Scottish colleagues did not seem to tell him? There are indeed back-end fees in Scotland, but they are not variable between universities.

Vincent Cable: The Government now wish to introduce variable fees, so the hon. Gentleman's intervention is helpful.
	We take the view that there is choice: either universities can attract additional funding through user fees, or such things can be paid for through progressive taxation. That is essentially the choice that has to be made. If someone goes to, let us say, Oxbridge, gets a first-class degree, goes into commercial law and has a very large graduate premium as a result, it is right that they should pay on their marginal income over £100,000 through their lifetime earnings back to the state the benefits that they have received from their education and that they should pay more than someone who goes into a modestly paid job as a scientific researcher or a teacher, reflecting their ability to pay. That is an admirably equitable way to deal with the problem. It is both equitable and financially sensible because, of course, it raises additional resources.
	During Education and Skills questions before the debate, the Secretary of State was extremely evasive about how much money would eventually be required. We have indicated that, from our top-rate tax policy, we would allocate £2 billion to universities—a sum larger than the upper end of what the Secretary of State indicated that the Government's policies would generate. On top of that, we would find £1 billion to extend the Scottish policy of free personal care. Of the £4.5 billion that would be generated by the top-rate tax, a substantial residual would be left to help keep down local taxation.
	I repeat that policy because the Government attempt to ignore what we propose. We can argue the merits of each component. We can argue about the principles of higher taxation on high-income groups—there is an economic argument for and against—but, by trying to belittle and ridicule our policy, the Government are trying to deflect the attention of Labour Members from what many of them regard as a very attractive alternative approach to that very difficult problem, and I finish on that note.

Mr. Deputy Speaker: I remind the House that the 10-minute limit on Back-Bench speeches operates from now on.

Martin O'Neill: Thank you, Mr. Deputy Speaker. I am conscious of the time limitations, so I may find it difficult to accept any intervention.
	I realise that the Department of Trade and Industry's role is somewhat marginalised and that the Liberal Democrats have already suggested abolition of that Department. Energy and employment matters require some consideration—I shall come to them in a moment—but at the heart of the Government's economic strategy is the role played by the manufacturing economy. Indeed, the prerequisite of the manufacturing strategy enunciated by the Government is macro-economic stability.
	It is fair to say that the cornerstone of that stability is the performance of the Monetary Policy Committee, which has a responsibility to maintain low price inflation by adjusting interest rates. The Chancellor has sought to avoid volatility in public finances. It is also fair to say that the success in meeting those objectives has enabled us to enjoy low inflation, broad tax stability, increasing employment and, most importantly, sustained economic growth, capable of funding the much needed improvement in the quality and range of public services. That has been achieved in the United Kingdom at a time when we have seen cuts, unemployment and decreasing living standards across the industrialised world, whereas we have seen continual improvements in this country.
	There is a condition among Conservative Members that could be called the year-zero syndrome: there was no history before 1 May 1997. There may be one or two people who have a vague, hazy memory of a golden period in the 1980s. It is a wee bit like the Rip van Winkles of rock and roll who cannot quite remember the drug-sodden 1960s, when they were making money and entertaining people. Many Conservative Members think that there was somehow a golden age. I have to tell them that some of us have different memories. We have memories of 3 million people out of work. We remember when unemployment fell to about 2 million, but there were never very sizeable reductions in my constituency, where whole families were continually out of work for two decades. Unemployment in some communities was beyond any level of social sustainability. Thankfully, we have not experienced that over the past six years.
	When we hear people talk about anxieties over debt, the housing boom and the like, many of us remember the days of negative equity, household repossessions and evictions. Those of us who have been fortunate—if that is the right expression—to have been Members of Parliament for a number of years had dreadful surgery sessions on Fridays and Saturdays, when people came, invariably too late, to complain about how they had been treated by whichever provider of financial services had assisted them in getting into the plight in which they found themselves.
	Opposition Members choose to complain about the problems that we have at present. Frankly, if those are what they call problems, they ain't seen nothing. The degradation of people's life chances in the 1980s and 1990s was dreadful for those concerned, but Opposition Members talk flippantly about reducing public expenditure, denying young people and the elderly unemployed access to opportunities afforded by the new deal and the chances that people have for the first time in their lives to get off the unemployment registers.
	The fact is that some on unemployment registers need not just the offer of employment, but virtually to be led out of bed in the morning. We hear about the people in advertising and banking who say, "I won't get out of my bed in the morning for £1,000 an hour as a consultant." In recent months, some of my constituents have had to be helped from their homes to get to jobs. Given the chance and the help, Sure Start and the new deal, after 18 months, 150 people were taken on by Tesco in Alloa in my constituency. They are all still in work, and they are a credit to their communities and to the people who took the chance with them.
	If Conservative Members are talking about reducing public expenditure to 35 per cent. of gross domestic product, they must stop and think of the social consequences of what they would embark upon. We now see revived communities where we used to see communities where people stood on street corners and crossed the road when we got near them because they were ashamed to tell us that they were still out of work. Those people now have a self-confidence that they never had before because they are getting the chance to find work. They also have the self-confidence of knowing that the health care that they receive is improving and that their local hospital, which was inadequate and run-down, is being refurbished. They also know that the schools that their kids go to are better than they have been in decades—probably ever.
	It is also the case that, when people get into employment, they are treated in a reasonable manner. That is one reason why I welcome the Employment Relations Bill, although it does not go as far as some of us would like on matters such as union recognition. The best way to reform employment relations legislation is incrementally, using the salami approach that the Tories applied in the opposite direction. We should improve the quality of workplace opportunities slice by slice, and the Bill contains much that can be recommended.
	I have some praise for the Conservatives, because—in their own way—they started the liberalisation of many of the markets in the UK economy, including electricity and gas. The Energy Bill will make further progress and create a UK market in electricity and gas. It will also make the introduction of renewables easier for the transmission businesses. We still need to see the fine print on transmission charges and distribution network charges. The Committee—I hope that I am not a member, given the size of the Bill—will have scope to improve the Bill. There is also scope to enhance the contribution made by renewables, and that is important.
	It is vital to make the necessary legislative provisions to assist the storage of gas and its transmission into this country, because the gas that we will depend on in the years ahead will require new pipelines and storage facilities, both offshore and onshore, regardless of our intentions for renewables and the pros and cons of the nuclear industry. The Bill will go some way to achieving that, but it should also address the nuclear decommissioning authority. It is essential that we strip out of the economics of energy the costs involved in nuclear power. Much nonsense is talked, both by nuclear enthusiasts and by the plutonophobes, about the costs of nuclear power. If the costs are reasonable, I have no objection to an expansion of that industry, but I am not prepared to throw good money after bad.
	The Queen's Speech will create the correct balance between public and private contributions. It shows how we can operate a partnership in the United Kingdom and it will take us away from the dark days of low public expenditure, poor provision and divided societies. For that reason, I commend it to the House.

Brian Mawhinney: I declare two interests. The first is on the register, because I am the chairman of a pension fund. The second is that in recent days my wife and I have been blessed by the addition of two new granddaughters to our extended family. They will both qualify under the provisions of the Child Trust Funds Bill. As a consequence, I regard the Bill with interest and broadly support what the Government seek to do. I note that parents can add to the trust funds, and it will be interesting to see the details. However, more importantly, we should ask why such a Bill is necessary.
	I had a vague recollection of a Labour party document that I had read when I held a different position from the one that I occupy today. That document, published in 1996, said:
	"Britain needs a savings culture which will both benefit individuals and increase investment in the country as a whole."
	That is an admirable aspiration for an Opposition. The reality is that the Bill is needed, in part, because when the Government came to power the savings ratio was 10 per cent. and today it is 4.8 per cent. The Government have seriously undermined the savings culture that they aspired to achieve when they were in opposition. That is why we need such legislation.
	The second factor that contributes to the undermining of the savings culture was eloquently raised by the hon. Member for Twickenham (Dr. Cable). As he pointed out, Members on both sides of the House believe in the market. I believe in the market, so I am not one of those who think that Governments should intervene intrusively. I am sorry that the Chancellor is no longer in his place, because he might have remembered that, a few weeks ago, I sent him a letter sent to me by one of my constituents, which contained six half credit cards. Those cards had been sent to my constituent, unsolicited, over a period of a few months. My constituent pointed out that he earned, I think, £9,000 a year and the combined credit limit of the six cards—which he did not ask for, did not want and did not use, because he is sensible—amounted to £35,000. The hon. Member for Twickenham made the point that we have seen a dangerous escalation in debt and in personal debt. I am not an interventionist, but there may be a case for having some conversations about whether boundaries should be drawn, for the common good. I invite the Government to give further thought to that possibility.
	I now wish to spend slightly more time on the pension protection Bill. The Labour manifesto in 1997 promised tax reform to promote savings, but in his first Budget, the Chancellor announced the abolition of the dividend tax credits payable to pension funds. That means that each and every year under this Government the Chancellor has taken £5 billion out of pension funds and put it into the coffers. Is it any wonder that those who are entitled to receive pensions feel aggrieved at their diminished prospects? I am trying to make a sensible contribution to the debate, so I shall not pretend that the tax change is the sole reason for the pension industry being in semi-crisis, but it is a significant one. For that reason, the Government should put up their hand to at least some of the responsibility and address the pension issue with less arrogance and fewer suggestions that it is all someone else's fault.

Kevin Brennan: Will the right hon. Gentleman give way?

Brian Mawhinney: No, I will not, because we have a 10-minute limit on speeches.
	I want to examine the details of the pension Bill. The principle is almost certainly right. We need to address a serious issue on pensions. Given the contribution that the Government have made to the problem, it will be hard to sustain the view that they should make no contribution, even by way of guarantee, to underpinning a fund. It will be enlightening to hear Ministers explain why well run businesses that have a strong commitment to their pension funds should pick up not only a proportion of the cost of their own fund guarantees, but a proportion of the cost caused by the profligacy of other funds. It will be interesting to hear how the Government defend that proposal.
	As my right hon. Friend the Member for West Dorset (Mr. Letwin) said, this country is in grave danger of moving into a situation in which some people's pensions are adequate—and rightly so, because they have made a contribution over the years—and other people's pensions are inadequate. The legislation that the Government intend to introduce will be measured against the criteria of how it deals with that problem.
	The hon. Member for Peterborough (Mrs. Clark) and I have received numerous letters from constituents recently about the Triplex pension fund that operates primarily in our constituencies. It will not deliver to the people who have paid into it for most or all of their working lives. Constituents have asked me whether there will be a retrospective element to the intended legislation. I try to be honest with my constituents, so I wrote back to say that I thought it highly unlikely that the Government would introduce retrospective legislation. As a former Minister, I understand why that is, but the Secretary of State needs to understand that there is increasing anger out there. There is increasing anger among the people who are being deprived of their life savings and who are being told that everything will be all right from 2005, but that the provisions of the House are such that we cannot move any faster. That argument no longer carries weight with pensioners or those who are saving for their pensions.
	I hope that the Secretary of State will take these points seriously. He is already beginning to hear from the pensioners who are rebelling about the increased taxation that they now face. I have been in this place for 25 years and I find it fascinating that pensioners are leading the charge against the 70 per cent. increase in council tax that has occurred in the six years of this Government. Colleagues on this side and, I expect, colleagues on the other side of the House are starting to receive letters from pensioner constituents who have never rebelled about anything in their lives. However, those pensioners are saying that they simply will not pay any more.
	I think that I welcome the legislation, but I will want to read what it says. However, I say to the Secretary of State that there is a crisis now. Spinning out of the Queen's Speech debate needs to be action this day as well as action in the future.

Kevin Brennan: On a point of order, Mr. Deputy Speaker. Can you confirm that, even though there is a 10-minute limit on speeches, injury time is available to those hon. Members who wish to take interventions?

Mr. Deputy Speaker: Yes. I hope that the whole House now understands that that is the case. If an intervention is made, the intervention does not count against the time available to the hon. Member speaking. He is given an extra minute for that intervention. He is given an extra minute for the second intervention but, after that, no further allowances are made.

John Butterfill: Further to that point of order, Mr. Deputy Speaker. Can you also confirm that the debate is time-limited in that it must finish at 6 o'clock? If too many colleagues take interventions of the sort described, some Members will not get to speak at all.

Mr. Deputy Speaker: The hon. Gentleman is right. Despite the 10-minute limit, I am afraid that the clock does not stop ticking.

Denzil Davies: The Government rightly deserve credit—perhaps they have not been given much in the debate—for the prudent, if I may use that word, way in which they have managed the British economy over the past six and a half years. They have been able to maintain a reasonable growth rate of about 2 to 2.5 per cent. combined with low inflation and low unemployment. That compares very well with most, if not all, our major competitors.
	We should also realise that the Government have managed to attain such reasonable growth despite the relentless pressure on Britain and all the older capitalist countries of the west that now comes from global competition and free trade. To a great extent, that pressure comes from the far east—from China and, to a lesser extent, India. China has discovered capitalism, but perhaps the Chinese always knew about it. China is now using the instruments of global competition and free trade to boost the potential of its enormous economy and to put inexorable pressure on the capitalist economies of the west.
	It is the fashionable view among many of the chattering classes—especially economic editors, jet-setting bankers and business men and the international civil servants who fly from one international convention to another—that globalisation, as it is described, is an absolute good and should never be questioned or challenged. However, the view from less exotic surroundings is not quite like that. As the House knows, in many instances globalisation disrupts and disorientates societies and causes considerable economic and social problems.
	I get the impression that western Governments now increasingly shape their economic policies mainly to try to withstand the tide of globalisation and to try to maintain their economies in the face of it. Over the past few years in Britain, we have witnessed a decline in our manufacturing industry because manufacturers must reduce their costs to compete but cannot put up their prices because of the pressure on those prices. We therefore have lower levels of investment. If one cannot make a profit, there is no money to invest. The service sector thought for years that it was immune from such problems because it was not an internationally traded sector. However, as we know, that sector is coming under similar pressure, with jobs being exported to low-cost countries.
	Germany and France have broken the growth and stability pact because they need to borrow more money, presumably to try to create growth. They are also being encouraged to dismantle their excellent systems of social welfare. Apparently they are being told—whether it is right or not—that they cannot compete in the modern world of global capitalism with the excellent social welfare structures that they have.
	The United States has thrown out the whole economics textbook for its economy. As the Chancellor of the Exchequer informed us, it has a massive public sector deficit of 5 to 6 per cent. and a corresponding balance of payments deficit. Despite its public sector deficit, it is cutting taxes, and the chairman of the Federal Reserve has announced that he will not raise interest rates above 1 per cent. whatever happens to the economy. He is absolutely terrified about what is likely to happen.
	On top of that, we must consider the devaluation of the dollar and, of course, the fact that the United States has started down the road of tariff restrictions and restrictions on imports. We know about the situation for steel and textiles and I hope that the steel restrictions will be lifted. It might give many Labour Members a warm feeling to criticise a Republican President of the United States for imposing steel tariffs but if the next President is a Democrat, his constituency—New Jersey, Michigan, parts of Indiana and Illinois, and Ohio and Pennsylvania—will demand much more protection than it has of a Republican President.
	Deep down, the British establishment is perhaps not terribly interested in British manufacturing, but that is not the case for the United States. The Americans will fight to preserve their manufacturing industry. They will certainly fight to preserve their steel industry, given its strategic importance for their defence and armaments sectors. Additionally, over the past 15 to 20 years the United States has apparently encouraged what is even by its standards massive immigration, especially from south America. Some immigration has been legal and some has been illegal. That process has kept down costs and enabled the country to compete—just about—and to meet the tide of cheaper imports. It is not really competing because it has a massive balance of payments deficit, but at least it is trying to do so by using immigration.
	The British economy has been unable to attract the same kind of new entrants into its labour market through immigration. However, there have been new entrants into the market in the past 20 years because women who did not previously have jobs have entered it. Many earn fairly low wages and, in a way, that contributes to keeping down costs. My right hon. Friend the Chancellor has introduced the tax credit system. As a rather old-fashioned Member who was in the House in the 1970s, I baulked a little at the idea of subsidising wages, but we live in a different world, so perhaps global pressures have caused that. The tax credit system effectively subsidises wages. The way in which it does so in the private sector means that private sector employers do not have to pay such high wages because the Government pay the difference, which keeps down costs in the global economy. If the pressure on wages increases, the gap will become greater unless the Government are able to maintain the difference through the credit. I do not know how long such subsidies can continue but I hope that they continue for a long time, even though pressures will be put on Government borrowing. The addition of such a pool of new entrants to the British labour market cannot continue because women usually take jobs immediately these days.
	Economic commentators and others suggest that we should reconsider immigration as a way to keep down costs, and we have also heard about that from the Home Office. I do not know the extent of the immigration that we would need to achieve that or whether sufficient people would come here from eastern European countries after they join the European Union. I do not know whether immigration could create the low cost base that Britain needs to compete or whether we could create the growth rates to pay for such immigration. We must face those issues in the light of global competition.
	Over the past two decades, globalisation has attained the status of what the ancients called the most high god—it is certainly the most high god of finance, business and economics. In the past, anyone who tried to question the divinity of that god was called nasty names and portrayed as a nihilist, an anarchist, a clapped-out Marxist or a weirdo. The high priests of the god did not show much sympathy for poorer countries that often suffered from the effects of globalisation. However, I can detect a change because it seems that western capitalist countries are beginning to suffer from the stern theology of the most high god of globalisation. As the traditional stimuli of economic growth—low interest rates, taxation, devaluation and new entrants—cease to work as stimuli, more direct action might have to be taken. I hope that we can recognise that so that we can create reasonable measures to ameliorate the damaging effects of globalisation while keeping some of its more beneficial attributes.

Stephen Dorrell: I begin by declaring an interest as a director and shareholder of a manufacturing business.
	I always enjoy listening to the right hon. Member for Llanelli (Denzil Davies), who always argues his case intelligently, but I did not agree with his starting point this afternoon. He has always tended to look at the downside of globalisation and consider how one may control its effects. I think that globalisation is a fact and that its effect on our economy and prospects is overwhelmingly positive and something that we should plan to accommodate rather than try to avoid.
	The hon. Member for Ochil (Mr. O'Neill) suggested that there is a danger of our assuming in such debates that history began in 1997, with the result that we make unrealistically stark comparisons between the records of two periods of government. He then proceeded to fall headlong into precisely the trap that he identified when he said that he had to acknowledge that the last Conservative Government had made a few faltering steps down the road of liberalising the economy. That is an interesting interpretation of history, which would not be borne out by historians.
	I agree, however, with the hon. Gentleman's proposition that these debates are interesting to their participants and those outside this place only if we stand back from the passions of party political debate. Clearly, some aspects of the Government's economic record should be welcomed, and I do so unreservedly. Most important, establishing the independence of the Bank of England and creating a regime for the effective management of monetary policy will, whatever happens between now and the day the Government leave office, stand as a great achievement of this Chancellor, and he should be given credit for that. He should be given credit, too, for restraining the growth of public expenditure in the early years of this Labour Government. Things have changed more recently, as I shall demonstrate later.
	Those two early achievements of the Government are beyond dispute. I hope that, in the same spirit, the Minister may reflect that the hon. Member for Ochil gave a rather niggardly account of the achievements of the last Conservative Government in the 1970s in liberalising an economy that was massively underperforming and creating the circumstances for which, ironically, the Chancellor now loves to claim credit. All Conservative Members enjoy his lectures about the importance of competition, contestable markets, labour market flexibility, low taxes, introducing incentives and establishing a regime for sound money. We are never quite certain whether they are addressed to his colleagues on the European Council of Ministers or to his next-door-neighbour in Downing street, but whichever it is they are very welcome. Imitation is often regarded as the sincerest form of flattery, and when I hear the Chancellor talk about the importance of a liberal economy he calls to mind the sometimes rather portentous lectures that Lord Lawson used to deliver. Sometimes, the two styles and two arguments are almost interchangeable. It is, of course, doubly ironic that the Chancellor loves delivering those lectures, given that he was a member of the party that, when in opposition, fought such changes every inch of the way throughout the 1980s and 1990s.

Martin O'Neill: rose—

Stephen Dorrell: I give way to the hon. Gentleman—I hope he agrees that I have given fairer recognition than he did to the achievements of the last Conservative Government in the direction of liberalisation.

Martin O'Neill: Perhaps I did not have enough time to develop my point. The liberalisation pursued by both Governments has placed the present Government in such a position that our economy has been that much better, stronger and healthier than, say, the French and German economies, which did not go down that road. It is to the Government's credit that they have pursued it in such a way that that advantage has been achieved and maintained.

Stephen Dorrell: I would respond with the proposition that that liberalisation marks us out from our European comparators. That moves me neatly to my point about the dangers that we face in relation to the trends in productivity that one of my hon. Friends identified earlier.
	We all know that long-term productivity growth is one of the most fundamental economic indicators. The Chancellor acknowledges that; it is why he set up a productivity unit in the Treasury and devotes so many speeches to it. The proposition is therefore not controversial. However, the problem with the Chancellor's productivity unit is that it has not been very productive. As one of my hon. Friends said, the effect of the Chancellor's policies since 1997 has been to halve the trend in the growth rate of productivity that he inherited from the equivalent period at the end of the previous Government's tenure. The trend has turned against us at the precise moment when the American economy has experienced a new spurt in productivity growth. That is not simply a dry statistic; it reflects the results of the Government's attempts to micro-manage the economy. I agree with the comments of the hon. Member for Twickenham (Dr. Cable) about that.
	The effects of the Chancellor's tendency to impose extra costs on the economy through regulations and to introduce huge extra resources into the public sector without demanding the extra productivity growth to which my right hon. Friend the Member for North-West Cambridgeshire (Sir Brian Mawhinney) referred are feeding through into the statistics. My right hon. Friend the Member for West Dorset (Mr. Letwin) mentioned the Chancellor's tendency to oversee increases in Government overhead expenditure without corresponding productivity growth. It is one thing to commit extra inputs to the health service, education and the process of government and to desire extra activity through regulation, but not insisting on delivering it efficiently undermines productivity growth and causes long-term problems such as the factor that the Chairman of the Treasury Committee identified.
	The Chancellor's delivery of his productivity objectives has fallen way short of his rhetoric. Consequently, although he likes to contrast this country's liberal economy with economies on the continent, the gap is narrowing because, step by step, his actions make the British economy more closely resemble its European comparators at exactly the time when he is trying to persuade European countries to change their stance to make their economies resemble ours.
	I want to consider a second issue, which is often perceived as separate from productivity but is closely related to it. The adverse trend in productivity in the past six years has been matched by an adverse trend in the public finances. I gave the Chancellor credit for slow growth inpublic expenditure in his early years, but Prudence has been jilted. Three years ago, when the Chancellor first looked forward to this financial year, he said that he expected to borrow £10 billion. In the City, that figure is expected to be not £10 billion but £40 billion. That misses the Chancellor's target by £30 billion because expenditure is outpacing income. That is partly because the growth of public expenditure has increased and partly because the slow-down in productivity is starting to lead to a slow-down in the growth of the British economy. The two lines are beginning to diverge. Productivity and public finances are part and parcel of the same phenomenon: if productivity grows too slowly, income starts to grow more slowly and one reaches the point when the public expenditure plans to which the Chancellor has committed himself cannot be delivered.
	My case is not that the Chancellor is about to fall off a precipice or that the Government will face an unbridgeable black hole. However, the Chancellor's irresistible urge to intervene imposes costs on the economy that undermine the achievement of his productivity objectives. That is one of the key factors that undermine the Chancellor's planning of public finances. We all know that if public finances start to get out of control, everything unravels quickly. We do not need to look into a crystal ball to work that out; we can simply look at the book.I give the Chancellor credit for starting quite well, but the performance gets worse by the day.

Geoffrey Robinson: I refer hon. Members to my interests, as listed in the register.
	It is always a pleasure to follow the right hon. Member for Charnwood (Mr. Dorrell), and although I totally disagree with the last point of analysis that he offered the House, I agree that a major underlying problem for the UK economy has been relatively low productivity, and I shall say something about that at an appropriate point in my discussion of the Government's economic policy.
	We also heard an interesting contribution from the right hon. Member for North-West Cambridgeshire (Sir Brian Mawhinney), who unfortunately has just left the Chamber. Speaking very constructively and in the best spirit of contributions from both sides of the House, he took us into the area of pensions policy and the forthcoming Bill. It is particularly good that we have my right hon. Friend the Secretary of State for Work and Pensions with us now. I know that if my hon. Friend the Member for Coventry, South (Mr. Cunningham) catches your eye, Mr. Deputy Speaker, he will want to say more about that than I do.
	My right hon. Friend knows that in the west midlands and other parts of the country there is a considerable problem concerning Rolls-Royce. My hon. Friend and I have been to see him, and he has been very responsive and understanding. Outstanding remains one of the points made by the right hon. Member for North-West Cambridgeshire, who asked whether the legislation will be retrospective. Everyone who has had the wretched task of wrestling with Government policy on the subject knows how difficult that could be, but it may well be, in this case, that that has to be an aspect of the legislation if proper account is to be taken of those who have been so badly affected.
	It seems clear to me that the Government's record is one of remarkable success, and as my right hon. Friend the Member for Llanelli (Denzil Davies) said, sustained growth is central to that fact. We have, as he said, been successful despite not only the many deflationary pressures of globalisation but the fact that so many other countries have been in recession; and after the pits of the recession into which the last Tory Administration plunged us in 1992. Every year after that we had successive growth, which we have maintained six and a half years into a Labour Government. That is unheard of in the management of the economy since the second world war. I give the Chancellor and the Government my unqualified support and my unqualified estimation for their success.
	We can express that success in a number of ways, one of the most remarkable of which is the fact that jobs have been created for 1.7 million people. That is remarkable and it, too, requires unqualified acceptance. However, there is an underlying problem of productivity. Only if we can maintain and, indeed, increase the rate of productivity growth will we stand any chance of offsetting the negative effects of globalisation. In no way can I agree with the right hon. Member for Charnwood when he speaks of the unqualified blessing that globalisation brings. No major movement in global macro-economics can be an unqualified blessing for this economy. One has only to look at the 2,500 jobs being lost in the service industry, which we always thought was recession proof and would make up for the decreasing manufacturing sector, to realise the sorts of problems that we are facing.
	Over the next year we will be considering the introduction of foundation hospitals. In an earlier debate I made it clear to the House that I had my reservations about that. Many of us voted for the proposal because there was a promise from the Secretary of State for Health that he would review those hospitals acquiring foundation status to see how the measures worked in practice before the scheme was extended to the entire NHS. That is a welcome concession, and we intend to hold him to it. Certainly, in Committee, we will be looking to make sure that proper revision processes are built into the Bill.
	The development and implementation of the policy on foundation hospitals was reminiscent of how we have developed and implemented policy for universities. Neither policy is totally wrong: much in both of them is good. It is rather that the issues have not been properly thought out and the problems worked out ahead of time, so we have had to do that in the House, both from these Benches and across Benches. My right hon. Friend the Secretary of State for Work and Pensions is thoughtful on these matters. I put it to him that, if the process of policy development were properly dealt with before implementation—as he knows, that is what we used to do successfully in the Treasury—we would have fewer problems than we have had over policies in recent weeks.
	I assure my right hon. Friend that I would never put the Government in an embarrassing position in the House. We only have to consider the prospect of the policies proposed by the Opposition to realise what is at stake. The shadow Chancellor again confirmed that the 35 per cent. GDP target for public expenditure stands. He told us that that amounts to an £80 billion cut. If we assume that each job is worth about £40,000 with all the associated costs, that means a head count reduction and a loss of about 2 million jobs from the public sector. Two million jobs is precisely what the Tories managed to lose the last time they were in office, so perhaps it is a secret plan. They seem to have forgotten—they never learn anything, and even forget the few lessons that they could learn—that enormous costs come with 2 million unemployed. There is the soaring cost of the unemployment bill. That is how we ended up with a deficit of £80 billion the year they left office. Debts had soared as a percentage and in total terms. It is greatly to the credit of the Labour Administration that we have reduced that deficit.
	I shall deal with the other aspects of Conservative policy, which were clearly confirmed today. We were told that the Tories would cancel the new deal for everyone, except perhaps the over-50s, because it has been a ridiculously expensive failure. I agree that the new deal has been expensive, but it cannot be called a failure. It dealt with and eradicated youth unemployment, and the growth in the economy underpinned that. We shall hear what more the Tories have to say about that.
	It is clear that the proposals of both the Conservatives and the Liberal Democrats could not command the support of the House. For that reason, whatever our reservations about how we have developed and implemented policy, there is no question of my failing to support the Government as and when necessary.

Gerald Howarth: On a point of order, Mr. Deputy Speaker. The Armed Forces (Pensions and Compensation) Bill was presented to the House this afternoon. I understand that Bills are not always available at the time of presentation, but I seek your guidance because that Bill is not available today, so presumably you and the House have been presented with something that is not there. Apparently, it will be available tomorrow morning when the House is not sitting.
	This complex legislation has far-reaching consequences for Her Majesty's armed forces. For that Bill to be presented today and, for some obscure reason, not to be available to right hon. and hon. Members, but to be available to the public tomorrow and to Members of the House on Monday, is a discourtesy to the House. Mr. Deputy Speaker, I wonder whether you can advise me on what action I may be able to take to protect the rights of Members to have sight of legislation at the first opportunity, and certainly before the rest of the public has sight of it.

Mr. Deputy Speaker: As I understand it, there are precedents for such an occurrence. As the Second Reading of the Bill will not take place before Christmas, there should be adequate opportunity for hon. Members to study the content of the Bill in due course.

Alex Salmond: Thank you for calling me, Mr. Deputy Speaker. I was momentarily alarmed when you looked at the other side of the Chamber.
	I want to speak about the consequences, through the operation of the Barnett formula, of aspects of the legislative programme for funding in Scotland. The Barnett formula is the Schleswig-Holstein question of Scottish politics. Only three people understood it. One is mad, one is dead—and I have forgotten. Certainly, Lord Barnett has forgotten—in a radio interview I did with him some months ago, he seemed to have forgotten the precepts of his own formula.
	Contrary to what many hon. Members believe, the Barnett formula is an equalisation formula. It is designed to converge identifiable public spending per head in Scotland, Wales and England. It has not done so probably for two reasons. One is that the population estimates on which it was based were initially retrospective. Secondly, it does not work in periods of low growth in public spending. Barnett applies to public spending growth. If public spending growth is near zero, as it was in the 1990s, not just under the Conservative Government but in the first few years of this Labour Government, Barnett does not apply.
	Both those things have gone into reverse. The current part-time Secretary of State for Scotland, when he was Chief Secretary to the Treasury, amended the population co-efficients in a way detrimental both to Scotland and to Wales. Public spending is now rising quickly. Barnett is cutting in with ferocity. There is a Barnett squeeze on Scottish public spending and indeed on public spending in Wales.
	Measures within the legislative programme such as top-up fees, in the same way as the measures on foundation hospitals in the previous Session, will undoubtedly have an impact on Scottish public spending via the Barnett formula. I cite Professor Arthur Midwinter, who told the Scottish Parliament enterprise and culture committee on 2 September this year:
	"Top-up fees are not classified as public money, but as fees paid by individuals. All the money would accrue directly to the universities concerned. The result is there would be no Barnett consequentials for those fees, and there would be a funding gap between the Scottish and English universities."
	That is similar to the point made earlier in the year by two other respected Scottish economists, Margaret and Jim Cuthbert, who wrote to The Herald on 6 May:
	"Mr. Blair's proposal to introduce foundation hospitals in England potentially has adverse financial implications for Scotland, arising through the operation of the Barnett Formula."
	Legislation to be applied in England will undoubtedly have adverse consequences for Scottish public funding through the operation of the Barnett formula. It is therefore extraordinary that any Scottish MPs, never mind Scottish Labour MPs, should choose to support those measures.
	There used to be an old joke in Scottish politics. How many Scottish Labour MPs does it take to change a light bulb? The answer is none because Scottish Labour MPs never change anything. That is no longer true. Scottish Labour MPs changed public policy south of the border on foundation hospitals a few weeks ago and potentially could do it again on the issue of top-up fees.
	After 100 years of struggle, 100 years of the Scottish Labour party introducing enlightenment, education and socialism to the dark recesses of the south of England, after 100 years of political struggle, we have come to the pinnacle of the achievement of Scottish Labour MPs, which is to impose private finance on the English health service and potentially to impose top-up fees on English students, to the detriment not just of English public services but of public services in Scotland via the Barnett formula.
	I see some worrying nods of agreement from Conservative Members. It is extraordinary that Scottish Labour MPs should vote in massive numbers for those detrimental measures, but equally extraordinary is the abstention of the sole Scottish MP in the Conservative party. That party is meant to be vigorously opposed to these measures, which will undoubtedly be detrimental to Scotland, but he has sat on his hands and refused to vote. If the Prime Minister made everyone on the Labour Back Benches a Minister and managed to mobilise the payroll vote and, by some miracle, his blandishments meant that he scraped through the top-up fees vote by one vote in the early part of next year, and if the hon. Member for Galloway and Upper Nithsdale (Mr. Duncan) had abstained on that vote, he and the Conservative party would look even more ludicrous than they do already in attempting to claim the title of shadow Secretary of State for Scotland when they have a party of one person. I hope that Conservative Members will encourage their one Scottish representative to vote both in the Scottish and the English public interest in defence of Scottish and English public services.

John Butterfill: May I say on behalf of my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Duncan) that he thinks it important as a point of principle that as a Scottish Member of Parliament he should not be voting on exclusively English business?

Alex Salmond: Unfortunately, the hon. Member for Galloway and Upper Nithsdale probably has not read the work of the economists who have pointed out to the Scottish Committees and the Scottish Parliament the implications for Scotland and the definite knock-on effects of the measures. For many years in this House I have adopted a policy of not voting on English business and I still do that when there is no financial consequence for Scotland. The recent controversy over jury trials in England is an example. As the matter ping-ponged between the House of Lords and the House of Commons, my colleagues and I nobly abstained. An abstention on such a matter, which has no consequences for Scotland, is understandable, but it is totally inexplicable to abstain on a matter that clearly has a financial consequence for Scotland.

Kevin Brennan: Do I understand the hon. Gentleman's policy to be that Scottish Labour Members of Parliament should not vote on matters that affect England only, Conservative Members of Parliament from Scotland should vote on matters that affect Scotland only, and he feels free to do as he pleases when he pleases?

Alex Salmond: Occasionally, I despair. I have carefully argued that the Bills that we are talking about—concerning top-up fees and foundation hospitals—affect Scotland. What I find incredible is not that Scottish Labour Members voted, but that they voted in favour of a measure that will reduce public expenditure in Scotland as a consequence of Barnett. I do not mind people voting on a matter that is of interest to Scotland, but I resent foundation hospitals going through with a majority of 17, with 44 Scottish Labour Members of Parliament voting to impose the measure on the English health service.
	I want to come to the solution to the conundrum that we have been left with as a result of the activities of past Conservative Governments, who imposed the poll tax on the Scottish people, and the current Labour Government, who imposed foundation hospitals on the English people using the voting fodder of Scottish Labour MPs. Let us be fair to Scotland and England. Clearly, the way to avoid the unwanted consequence of knock-on financial effects is to give the Scottish Parliament the financial power to match its policy responsibility. If the Scottish Parliament had fiscal autonomy, it would make its own decisions about matters such as foundation hospitals and top-up fees without fearing the consequences of the decisions made by the House of Commons. Policy responsibility and financial responsibility should go together. That is the first point.
	Secondly, as regards Bills that do not have a financial impact on Scotland at present, why does the House not consider extending Standing Order No. 97? As everyone is aware, that is the now little-used Standing Order by which the Speaker can certify Bills as Scottish only. For Second Reading and perhaps for Committee stage, such Bills are referred to Scottish-only Committees. It would be relatively simple to have an equivalent Standing Order relating to England to allow Bills that were genuinely English-only at that stage to be considered by the mysterious Regional Affairs Committee. That Committee sits in this House and every English Member is entitled to be a member of it—I have the current membership before me—but it has not met since this April. No doubt it could do some useful work in considering English-only legislation, if so certified under a Standing Order by the Speaker of this House. If and when the Scottish Parliament is given the powers to do the job that it is required to do for the Scottish people, all such English Bills could be so certified, and voted on by such a Committee. That is a solution that is elegant, fair to Scotland and fair to England.
	Of course, none of these problems would arise if we had independence for Scotland—and independence for England. Many people tell me that England could not manage as an independent country. I reject that. I am certain that the English people are well capable of governing themselves, and can actually do without Scottish Labour MPs being used as voting fodder by this Prime Minister, in order to impose unwanted policies on the English people.

Tom Clarke: If the hon. Member for Banff and Buchan (Mr. Salmond) will forgive me, I think that he answered his own question at the end of his speech. The fact is that the Scottish people have never voted for independence, so as a Member of this United Kingdom Parliament, I hope to make the speech that I had planned to make when I sought to catch your eye, Mr. Deputy Speaker.
	The sections of the Queen's Speech that have been substantially addressed by the Chancellor of the Exchequer and my colleagues—on economic stability and growth; on the need to press for a fairer trade system as part of the current round of world trade negotiations; and on the achievement of the millennium development goals, including increased aid flows and effective debt relief for developing countries committed to reform—are extremely relevant. However, it would not be possible to address those matters were it not for the huge success throughout the whole of Britain of the Chancellor's economic policies: successes in employment, inflation, mortgages and growth. Because of those successes—and because the Chancellor has had the courage to deal with the issue of resources, and to say that there are times when they should relate to reform—I hope to address several matters in the short time available.
	The Chancellor has given the lead at home and abroad. When my right hon. Friend the Member for Llanelli (Denzil Davies) and my hon. Friend the Member for Coventry, North-West (Mr. Robinson) referred to globalisation, they seemed to recognise, as did the Chancellor, that he has approached the economy and the demands placed on him in the knowledge that this is a rapidly changing world in which the issue of globalisation is indeed extremely relevant, and must be addressed. His policies on international development—including increased aid, debt relief and his emphasis on HIV/AIDS—are extremely important in a modern and caring world. I believe passionately that the model that he has set out could be emulated not only by G7 and G8 countries, but by developing countries as well.
	As we look to the developing world, we see the influence of Britain's economic policies and of the activities of the various Government Departments. If the considerable assets that many developing countries undoubtedly possess—such as huge oil reserves, massive gas supplies, and diamonds and other mineral resources—are not used to benefit the poorest people in the poorest countries, we will have met with spectacular failure. Oil, gas and mining industries are now significant in more than 50 developing countries, but 1.5 billion people in those very countries continue to live on less than $2 a day. Twelve of the world's 25 most mineral-dependent states and six of the world's most oil-dependent states are classified by the World Bank as heavily indebted poor countries, with among the world's worst human development indicators. That calls for transparency, accountability and fairness at every level.
	That transparency must involve national Governments, including ours, international companies and those involved in commerce, and international institutions such as the World Bank, the International Monetary Fund, and the United Nations. I believe that I speak for many aid agencies and non-governmental organisations when I say that we ought to be forming that strategy now.
	It is not difficult to understand why. For example, Africa's oil boom comes at a time when foreign aid to that continent from industrialised countries is falling and being replaced by an emphasis by donor nations on trade as a means whereby African countries can escape poverty. The dominance of oil and mining in Africa's trade relationships, coupled with the decline in aid flows, means that it is vital that Africa makes the best use of oil and other natural resources.
	The international oil companies must accept their responsibilities as well, although it has to be said that I see little evidence of the self-regulation that some of them commend to us. Northern Governments such as that of the United States and the United Kingdom are beginning to acknowledge the need to address the perils of oil development, but their actions, although welcome, are not enough.
	As we address those issues, seeking to attain stability is of paramount importance. I have recently been to the Democratic Republic of Congo, and I realise that there, petroleum has become a magnet for conflict, and in some cases even civil war, imposing even more poverty where it is least welcome.
	The primary responsibility for managing mineral wealth and ensuring transparency lies with the developing countries. Oil riches should benefit the many, not the few. It cannot be right that corruption, mismanagement, environmental destruction, human rights violations and conflict should go unchallenged—although there are examples of good practice, and it is right to say so. For example, the Chad-Cameroon pipeline project is the biggest international effort to date to focus an oil development project on a poverty reduction outcome. There is great confidence that by 2004, the budget anticipated for that year will show that oil revenues in Chad have more than doubled. Botswana has, by and large, put its diamonds to good use, and has sought to address the essential elements of poverty.
	However, there is another side to that picture. It cannot be acceptable that in Angola there is so much wealth together with so much confidentiality, despite the challenge that BP, to its credit, has made. The rich north has its responsibilities too. Although we may increase our aid to developing countries, those sums are dwarfed by what we give to agricultural industries.

Barry Gardiner: My right hon. Friend is widely respected in the House for his knowledge of development matters. Does he agree that the Paris Club consideration of the sovereign debt of Iraq, which is deemed to amount to more than $200 billion, is vital? Does he also agree that it is important to press for the more beneficial Evian principles on debt forgiveness if that country is to pull itself out of its terrible situation? Will my right hon. Friend support the early-day motion, which calls on the other four creditor countries—France, Russia, Germany and Japan—to be more forgiving in their approach to this matter?

Tom Clarke: I am grateful to my hon. Friend for his intervention. He will forgive me for being a little canny on early-day motions: I like to read them before I sign them. Otherwise, he made extremely valid points, and I am sure that the House will recognise them as such.
	I was making the point that, although I support the Government's policies on overseas aid, it is also appropriate to examine what is happening with the common agricultural policy, and I welcome the Government's initiatives there. It is also appropriate to point out that in comparison with the figures that I supplied earlier of $300 billion on agricultural subsidies, $600 billion is being spent on defence. It is surely right to try to set our priorities on such matters.
	I believe that the British Government have given a commendable lead. The Chancellor, in particular, has led G7 and G8 talks on the debt crisis and other matters. I welcome what is happening to the common agricultural policy, which is a challenge to us all. I welcome the overhaul of the EU aid budget and our attempts to change it. I congratulate the Chancellor on his international finance facility and I wish the Government every possible success on all those matters. The Government have a record since 1997 of which we can be extremely proud.

John Butterfill: I shall confine my remarks to the proposed pensions Bill, which may not surprise hon. Members, and I should like to declare my interest as chairman of trustees of the parliamentary contributory pension fund and chairman of trustees of the People's Dispensary for Sick Animals pension fund and as a section 226 policyholder. I shall refer to those policies later.
	I start by referring to the pensions protection fund. In principle, it is probably a good idea, which should be welcomed—but the devil will, as always, be in the detail. The proposal to have a flat rate topped up by a risk-based premium is entirely appropriate. Otherwise, there would be moral hazard and people with badly funded schemes would benefit from those with well-funded schemes. The Association of Consulting Actuaries conducted a survey and found 58 per cent. support for the proposal, but 64 per cent. of respondents said that a £15 contribution per member was too high. PricewaterhouseCoopers, however, has determined that in the light of what the Government actuary proposed, the appropriate level for funding the White Paper proposals would be £50.
	I do not believe that £50 per member is wholly disproportionate, as it amounts to about £1 per week for a member of any private pension scheme. I would have thought that anyone in such a scheme would feel that it was quite good value to have a guarantee for £1, and I hope that that is the mechanism that the Bill will produce. It will, of course, vary from fund to fund and the less-well-funded schemes might find that they needed to raise more than £1 a week per member. Will the Government tell us who will audit the schemes to decide what the premium should be? Will it be left to the scheme actuary or will independent checks be made on what the premium should be? I agree that a cap is necessary on income and that £40,000 to £60,000 is probably not unreasonable, provided that the cap is indexed in accordance with incomes rather than with the cost of living.
	We can learn some lessons from what has happened in the United States where there has been a similar fund for many years, from which the Government have drawn much inspiration. The US scheme is similar in that it is self-financing and there is no Government guarantee, which is, I understand, our Government's position. Interestingly, there are two types of scheme in the USA: the single-employer scheme, which had a deficit of more than $3 billion by the end of 2002, and the multi-employer scheme, which had a small surplus. That may be a lesson for us. Multi-employer schemes, which the Government would need to facilitate, may be more prudentially managed than single-employer schemes, so perhaps we should look into that. We should take cognisance of the comments of Steven Kandarian, the executive director of the US scheme:
	"Who will pay for the pension promises made by companies to their workers? The only choices are the company that made the promise, other companies through a system of pension insurance, or the taxpayers."
	More than 50 per cent. of members of the National Association of Pension Funds support the proposals, but 50 per cent. also say that they will make defined-benefit schemes less attractive for employers. Almost 50 per cent. think that the Government should fund the whole thing and that there should be no levy on NAPF members. The association suggests a benefit limit rather than a salary cap, but asks how the schemes will be inflation-proofed, how the costs will be estimated and how the risks will be assessed. The NAPF has also asked how such schemes would deal with early retirement due to ill health and whether they would affect the priority orders that the Government are—rightly—proposing to introduce.
	Most people support the schemes, but it will take time for employers to introduce them and employment contracts may need to be renegotiated, so 2005 looks a little optimistic, although the Government would have then had eight years to introduce the reforms. That seems rather a long time; there has been an awful lot of consultation and it has taken an awful lot of time.

Steve Webb: The hon. Gentleman is making a most informative speech. Does he share my concern that the Bill needs to include detailed provisions on the questions that he has put, so that the House can properly debate those issues? It is important that we do not have a skeletal Bill with other provisions shunted through in statutory instruments that receive no real scrutiny.

John Butterfill: The hon. Gentleman is well informed on these issues and I entirely agree with him. It would be wrong if the Bill were merely an enabling measure with statutory instruments to follow. As I said earlier, the devil is in the detail.
	Other proposals in the Green Paper and the White Paper include a pensions cap of a £1.4 million lifetime limit. That is much too low. It would not even fund the 1989 Lawson cap on earnings. The actuarial profession almost universally disagrees with the calculations of the Government Actuary's Department, which came up with the figure of £1.4 million. The profession is convinced that the figure should be £1.8 million. I hope that the Government will look into that again; it is a question of how the actuaries do their maths and the GAD is in a minority of one on that figure. Again, time will be required for employers to renegotiate many employees' contracts, as they will be affected by the issue.
	I also want to mention the effect on other tax matters. First, there is the knock-on question of retained benefits. It is wrong and unfair that a person taking a job at a pay rate lower than in his or her previous employment should suffer by having the previous higher contributions acting against the total that can be accumulated over a lifetime. Indeed, the lifetime limit means that we no longer need the retained benefits regime, and I hope that the Government will get rid of it, as part of this process.
	The annual limits ought to go as well. They are a nonsense anyway, as many people have fluctuating incomes. Again, the cap means that there is no need for the annual limits. The annuity purchase also ought to go. I think that the Government are beginning to be persuaded of that, subject perhaps to a minimum level. That has been proposed in private Member's Bills by me and many other hon. Members. I hope that the Government will finally see the need to change the present structure.
	If the annuity purchase requirements are eliminated, there will be a need to cater for people who will be just short of 75 years of age when the Bill comes into effect. I hope that the Government will allow an extension for them.
	I hope that reform of the legislation will also cover legacy schemes and accrued rights. I think that the Government are proposing to do something on accrued rights, but a great many different legacy schemes exist, among them SERPS, graduated pensions and S2P. The White Paper refers to guaranteed minimum pensions, and I hope that the Government will sweep them all up into one regime. The Government Actuary has told me that that can be done, and that it would take about two years to do the calculations. That would alleviate much of the burden placed at present on employers, scheme trustees and civil servants.
	The White Paper also refers to the legacy private schemes. Those schemes include the pre-70 scheme, the section 226 scheme, retirement annuity contracts, personal pensions, and schemes under the legislation passed in 1987 and 1989. They are all to be consolidated, but the difficulty is that they come under different tax regimes. The problem will be to come up with a system that is fair to the members of the various schemes and which will not cause huge disadvantages. I hope that the Government will look at that, as there is a severe danger of retrospective taxation.
	My time is now up, so I cannot deal with the blame and compensation culture. However, I shall write to Ministers about that.

Kevin Hughes: I am grateful for this opportunity to speak in the Gracious Speech debate. I congratulate my right hon. Friend the Chancellor on his excellent exposé of what would happen if the Opposition were ever to return to government. The Government's legislative programme is about fairness and the future, while the Opposition's proposals are clearly about division and a return to boom and bust.
	Our programme is about facing up to the challenges of the future in a way that pursues social justice for all. It is an agenda based on the continuing economic stability and prosperity of the country. It is about reforming public services so that they are universal and personal, building a strong civic society with less poverty and less crime, and encouraging an outward-looking nation and a diverse, more tolerant country.
	This Queen's Speech builds on our previous legislation. In the last year alone, we have passed some important new laws that give new powers to the police and local authorities to tackle antisocial behaviour. The Government have set down tougher sentences for repeat offenders and sex offenders, and streamlined court procedures. They have tackled organised crime and terrorism, devolved power to front-line staff in the NHS, and offered more choice to patients.
	I want to welcome in particular the inclusion in the Queen's Speech of legislation that will tackle domestic violence and give more support for the victims of crime, protect children with a new children's commissioner, improve housing by tackling bad landlords in poor communities, give people more pension rights and protect pension schemes, introduce a supreme court and abolish the role of Lord Chancellor, and get rid of the 92 remaining hereditary peers. If it were left to me, I would get rid of the lot.
	I welcome the proposals to introduce an identity card. It appears that the higher education Bill will be a bit of a problem for the Government. I do not have a problem with the idea of top-up fees. On balance, it is perhaps right for people to make what would be a small contribution towards their higher education. However, I take issue with the possibility of breaking a manifesto commitment. Call me old-fashioned, Mr. Deputy Speaker, but I believe that the manifesto is a contract of trust with the electorate. I would not want to go back on a commitment without first, explaining why it is felt to be necessary, and secondly, being convinced that there is no other way of delivering the policy.
	The Government will also introduce an energy Bill, which will be based on the White Paper published in February this year. It is crucial for our economy and well-being that we get this right. We need a Bill that delivers security of supply by using a diverse fuel mix. However, the White Paper sets us off down the uncharted path of being a net importer of energy. We have ageing nuclear plant and no plans to replace it. I am not a great fan of the nuclear power industry, but I recognise that we would be hard pushed to keep the lights on without it. I have a sneaky feeling that the Government know that too. Why else did they pour in £650 million earlier this year to prevent it from going bust?
	We had an abundance of natural gas, but we squandered it to generate electricity, instead of using it wisely for domestic purposes only. At the rate we are using it, we will be lucky if we have any left in 15 years' time—then what? The White Paper plans for us to import energy down a huge pipeline stretching across the European continent from such politically stable countries as Uzbekistan. We have an abundance of accessible coal right under our feet. It is a reliable fuel that delivers base load electricity when and where it is needed. Across the world, particularly in the USA, Governments are investing heavily in coal because they recognise its reliability and potential. In the White Paper, our Government clearly plan for the demise of our indigenous industry over the next 10 years. They seem to favour importing all energy from other countries.
	Today, the Hatfield colliery in my constituency faces closure, although it sits on 80 million tonnes of good quality coal and has planning permission for an integrated gasification combined cycle power plant on the site, which can generate electricity from coal without the associated toxic emissions and can capture carbon, nitrates and hydrogen. We should ask ourselves why the US Government have invested $6 billion in developing such clean coal technology, yet the UK clean coal research and development budget totals a pitiful £25 million.
	Last week, the coal investment aid scheme announced an amount of £60 million. It is only half what we expected, but I welcome it. It came just too late for Hatfield. Had it come in a seamless transition from the operating aid scheme that ended last December, I am confident that the colliery would not be facing the financial difficulties that it is this week. That is recognised and well summed-up in today's Yorkshire Post leader column, which says:
	"Had the Government taken a more strategic view of the Britain's energy needs, it is likely that Hatfield Colliery would not have been forced into administration."
	It adds:
	"The fate of Hatfield, however, is inextricably linked with that of Britain's other remaining pits. For not only does the colliery, along with the currently mothballed Thorne pit, contain about half of the established reserves of British coal; it also offers hope for the future in the shape of a new clean-coal power-station development which could go ahead if the elusive investment became available."
	The Yorkshire Post is hardly noted as a socialist paper.
	Despite what the Yorkshire Post says, we have had some help from the Government. I am grateful to them for the help that they have given to us so far, but I hope that Ministers will continue to do all that they can to help me to sustain Hatfield colliery in recognition of the available coal reserves and the possibility of developing integrated gasification combined cycle technology there.
	To maintain the stable economy and build for the future, we need a safe and secure energy supply. It is foolhardy to plan to import the best part of our energy requirements. The Government should backtrack from that route, which will make our nation a hostage to fortune. It is hardly fashionable to talk about coal having a future—windmills are more in vogue, even though they cannot produce the goods—but the truth is that coal has served us well for generations and, with that new technology, it can continue to serve us for many years to come.

David Taylor: Does my hon. Friend agree that the type and level of investment about which he speaks would also secure mining jobs in the midlands and elsewhere? A major coalfield around Asfordby in north-east Leicestershire has 800 million tonnes of clean coal and is waiting for investment. There is a future for coal in the United Kingdom, although we are in the last-chance saloon and the lights are being switched off.

Kevin Hughes: My hon. Friend is absolutely correct. Coal has been the fuel of the past and, with the new technology, it can be the fuel of the future. In fact, it could have a bright new future. We as a Government and a country should seize this opportunity and get ahead of the game with the emerging hydrogen economy that is coming this way.

Steve Webb: Earlier in the debate, reference was made to some of the Government's large-scale IT projects, and in the few moments available to me this afternoon, I want to refer to just two of them. At the start of the new parliamentary Session, I want to plead for an end to the Panglossian assurances that all is well with those IT projects and the implication that it is impertinent of us to suggest that things might be otherwise.
	First, I wish to refer to the tax credits computer system. I was not at yesterday's sitting of the Public Accounts Committee, when it heard evidence from the head of the Inland Revenue and from EDS about the state of the tax credits computer, but now that the truth is coming out, it is clear that the assurances that we were given at the time that all this was a triumph and that everything was going swimmingly were very far from accurate.
	The head of the Inland Revenue, whose position must be open to question, said that the tax credit launch had gone "spectacularly wrong"—not a phrase that we have heard Ministers use in the past six months—and that the computerised payment scheme had repeatedly crashed, forcing hundreds of thousands of people who live on the breadline to wait weeks. As all hon. Members know, hundreds of thousands of emergency payments were necessary, and there is now evidence that billions of pounds may have been overpaid, again because of problems with the system.
	One of the things that I find incredible is that we can have blundering and administrative error on that scale but we barely bat an eyelid any more; we just expect it. We assume that huge Government computer projects will be a shambles. Given that up to £2 billion has been mistakenly paid, it is astonishing that Ministers have not made emergency statements to apologise to the House for the poor state of play. Instead, we get press releases from the Paymaster General and others saying that everything is a triumph. Sometimes I think that I have slipped into a parallel universe where all is well. Behind the scenes, the truth is very different.
	Our constituents know that the truth is different. They have been messed around by the tax credits scheme from day one. Many have had to wait long periods and some have fallen into debt and lost serious amounts of money. They were told that they could claim compensation, but to do that they had to ring the very helpline that they could not get through on in the first place. We had a letter from the Paymaster General this week that said that 1,600 people, out of 5.75 million, had received compensation payments of a grand average of £30 each. If I had led a life of misery earlier this year caused by the tax credits system and I had to go through it all again for £30 compensation, I would not bother.
	The spin from the Government is that the small number of people who received compensation must prove that there was not really a problem. However, if high enough hurdles are put in the way, people will not claim compensation. I suspect that many of us have had 1,600 complaints about the system just in our constituencies. The Government's complacency and unwillingness to be honest with hon. Members about the state of the problem are incredible. We get bland assurances that all is well, when we know from our constituency surgeries that all is not well. My plea to the Government for the coming Session is for honesty and openness when things go wrong. The new scheme is a massive undertaking. The head of the Inland Revenue even said that the system should not have been introduced as quickly as it was. We are told all the time that nothing is wrong, but that is so much at variance with the facts that we must wonder whether we live in a mature democracy and treated as mature representatives of our constituents or being patronised like children who cannot be trusted with the truth, perhaps because it is too horrible to be told.
	This year has seen not one EDS computer catastrophe, but two. The same company is responsible for the Child Support Agency computer system, which was 18 months late in arriving and is still a shambles. In the six months to the end of September, 150,000 families asked the CSA to arrange maintenance but barely 5,000 had received the money by that date. What is the point of the child support system if it is not to get maintenance through to people? If 150,000 families go in at one end and only 5,000 come out, we must surely question the efficiency of the system.
	The shifting of old cases on to the new system is to be delayed indefinitely, as far as we know, and that mess is costing real families real money. A family that does not receive maintenance loses out. For a family in work, every penny of maintenance that they do not get is a penny that they lose because the failure to receive maintenance has no effect on their tax credits. Although arrears build up and may be recovered later, they may not. We all know of cases in which the arrears run to tens of thousands of pounds that are never recovered. The Government may claim that things are getting better, but some of the money will be lost for ever to the children involved.
	Families on benefits lose the money permanently. As I understand the situation—the Minister may be able to clarify it for me—a lone parent on income support who receives maintenance can keep £10 a week of it before losing benefit. If instead of getting £10 a week for 52 weeks she gets £520 in a lump sum, because the CSA has delayed getting the maintenance, she can still keep only £10. She has therefore lost the benefit of £510 of child maintenance disregard. Does she lose that disregard permanently because of the delay? I suspect that that is what will happen.
	There is a further problem. All the families on the existing system cannot be moved over to the new system because of the computer problems. That matters because every mum on income support on the old system loses every pound that she receives in maintenance from her income support. If she moved on to the new system, she could keep £10 a week. Leaving aside the gainers and losers from the change in systems, every mum on the old system is losing £10 a week for every week of delay.
	These are not abstract problems or delays that do not really matter; they involve real money for real children, and much of it is money that will never be recovered.
	When a gentleman from EDS was asked in a Select Committee yesterday to talk about how much money the company was being penalised and other things, he was about to reply but was then shut up by a civil servant because the man from EDS is not supposed to tell people such things. It is all commercially confidential. We have a shambles, but we are not allowed to ask questions about it. We do not know whether taxpayers are receiving value for money because the information is all commercially confidential.

David Taylor: Does the hon. Gentleman believe, as I do, that this case points up the utter inadequacies of the private finance initiative and public-private partnership schemes to which, I regret, my Government have been wedded for almost seven years? Is he shocked at the lack of penalty clauses built into the private arrangements with EDS and other companies?

Steve Webb: I share the hon. Gentleman's concerns. In fact, I think that the situation is so bad that the Treasury is now not doing new PFI on information technology projects. Yet here we are lumbered with a system that is so bad that we understand from a letter that we received from the Department for Work and Pensions that staff members at the CSA are using pocket calculators because they are more reliable than the new computer. All we get from the Minister responsible for the CSA are bland and Panglossian assertions—they are the only words that one can use—that all is well with the world, that the system is getting on and that we are gaining momentum. In fact, real families are losing real money.
	There are penalty clauses in the EDS contract and I understand that some money is being withheld but whether permanently or temporarily I cannot be told. I have asked in the House, and I have been told that I cannot be told. I cannot be trusted with such information; it is all very hush-hush.
	The House needs to know the truth about what is going on, it needs to know when things are going wrong and it needs to know about the finances. How can we, on behalf of our constituents who are suffering, hold the Government to account if we are treated like children with incomplete and inadequate information and a refusal to tell us the facts? Such situations happen over and over again and, on behalf of our constituents, I urge the Secretary of State to be honest and open with us in all circumstances so that together we can hold these companies to account and ensure that efficient systems are put in place to deliver the benefits and the maintenance that our constituents have a right to expect.

Roger Berry: I welcome most warmly the publication yesterday of the draft Disability Discrimination Bill. I also take the opportunity to express my equally enthusiastic support for the Government's policies on jobs and public expenditure. They have brought benefits to my constituents, as they have to everyone else in the country. However, as we have had only a passing reference to the Disability Discrimination Bill, I shall devote my 10 minutes to that measure.
	I congratulate the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), and my right hon. Friend the Secretary of State for Work and Pensions. Both have earned the respect of many people inside and outside the House for their efforts not only on the Bill but to secure equal opportunities for disabled people. I warmly applaud them.
	The draft Bill will secure for disabled people many of the rights that were specifically excluded from the Disability Discrimination Act 1995, which was introduced by the Conservatives. Eight years since the Act reached the statute book, disabled people are still seven times more likely to be unemployed than non-disabled people. It is still the case that twice as many are likely to have no qualifications and that seven out of 10 disabled people report that they cannot go about their normal day-to-day activities because they cannot access buildings or transport. It is hardly surprising—but it should be shocking—to recall that there is now evidence that one in four disabled people offered employment decline that offer because they do not have access to the transport that will get them to work and back home again. We still face such problems, eight years after the Disability Discrimination Act was introduced.
	We face the problems largely because, as is well known, the Conservative Government of the time introduced the Act only because of public outrage at the manner in which they blocked legislation in earlier years. They opposed the very principle of securing equal rights for disabled people through legislation but, because of public outrage, they were eventually forced to legislate.
	I am afraid that the Tories' hearts were not in it. They did not establish a commission to enforce legislation. They excluded education and transport vehicles from the DDA. They excluded firms employing fewer than 20 people from the Act's provisions, which meant that millions of people in employment were denied any protection under it. They also excluded private clubs and drew up a list of occupations excluded from the Act's provisions, such as the police, members of the armed forces and firefighters.
	I would appreciate the Secretary of State's comments on the exclusion of certain occupations because it has always struck me as distinctly odd. The DDA provides that genuine occupational requirements should be recognised. We are not saying that disabled people have the right to take jobs for which they do not have the necessary skills, qualifications or experience. We are saying that if a disabled person has the necessary skills, qualifications and experience and is the best person for the job or is entitled to training opportunities and promotions, he or she should not be denied that by virtue of being a disabled person under the Act. Given that such people must prove that discrimination exists to get protection under the Act, I do not understand why any occupation should be excluded because we are considering a universal principle. I have heard the Secretary of State talk about the matter outside the House, so I am sure that he will clarify the Government's view.
	Many of the problems that I outlined have already been addressed. We now have the Disability Rights Commission. The exclusion of education from disability rights legislation was put right by the Special Educational Needs and Disability Act 2001, and the small firms exemption will disappear in October 2004. As my hon. Friends know, I wish that the exemption had not been created in the first place and believe that it should have been removed more quickly. However, small firms will not have the excuse of being able to pay no attention to legislation by October next year—praise be! Additionally, reasonable adjustments are defined in legislation. The shadow Chancellor talked about the imposition of burdens on small firms but they will be protected from unreasonable adjustments. The draft Bill will finish off most of the job of enshrining basic rights for disabled people in law.
	We need to extend the definition of disability for the purposes of anti-discrimination legislation. I warmly welcome the fact that the Government have set out their intention in the draft Bill for legislation to apply to all people with HIV, cancer and multiple sclerosis. The draft Bill contains a reference to the fact that regulations might provide for circumstances in which people with cancer would not be covered. Perhaps the Government want to protect people with cancer who are receiving substantial treatment and thus narrow down the group of people who would benefit. I hope that the Secretary of State will comment on that in his winding-up speech.
	Current legislation protects people with conditions such as HIV, cancer and MS if their condition is such that they cannot undertake day-to-day activities. However, it does not protect people who are diagnosed with such conditions if their symptoms do not mean that their physical or mental health is affected in such a way that their day-to-day activities are impaired. However, given that it is right to protect people from discrimination because they have been diagnosed with a condition that impedes their day-to-day activity, surely it is right to outlaw discrimination against people who have been diagnosed with such a condition that is not yet affecting their day-to-day activities. How can it be right that people with HIV, cancer or MS must wait until they have significant physical impairment before they are protected by the law? There should be protection from the point of diagnosis. I think that the Government are moving toward accepting that important principle in the draft Bill, but they have not quite done so.
	Clause 3 of the draft Bill provides for the extension of the DDA to cover discrimination in relation to the use of transport. I welcome that most warmly. As of today, it is still the case that if a person in a wheelchair wants to get on an accessible bus and the driver does not stop to pick them up, he is not breaking the law. It is also the case that if the bus does stop and the person in the wheelchair tries to get on, the bus driver can be abusive and push them back off again. Tragically, the Disability Rights Commission has cited examples of that type of activity. Such discrimination must be wrong, so it is welcome that the Government are taking powers through the draft Bill to address that gap in the DDA.
	I hope that while the Government are dealing with transport they will finally give us a date by which rail vehicles will be required to be accessible. I occasionally pop up in Transport questions to ask about that, but I have yet to receive an answer.
	I am delighted that private clubs with more than 25 members are to be included, as they are under the race relations legislation. I am sure that that will be widely supported by political parties, because it means that we will have to ensure that we do not give less favourable treatment to disabled people, and that we make the necessary reasonable adjustments for them.
	I am also delighted that public authorities will have a duty to promote disability equality, as they do in relation to race equality under the race relations legislation.
	In conclusion, I warmly welcome the draft Bill and hope that the Government will reiterate their commitment to legislate on the proposals during this Parliament, as they promised during the run up to the last election.

William Cash: I want to refer to a matter relating to economic management that has been causing the Chancellor of the Exchequer some concern—the primacy of European law under the proposed European constitution. Having listened to some hon. Members' speeches, that matter seems to have been somewhat overlooked. For example, the hon. Member for Coventry, North-West (Mr. Robinson) mentioned the last Conservative Government's disastrous policies on the exchange rate mechanism, conveniently forgetting that Labour Members were entirely behind those policies. Indeed, on the basis of the Government's current commitment to economic and monetary union, they would take us back in again.
	Last month, the Chancellor expressed deep concern about the danger of the European constitution undermining the role of national Governments in economic policy making. That is a serious matter, because it has an impact not only on the debates that we will have in future if the constitution goes through, but on the effectiveness of our position in the House of Commons in representing our constituents.
	To a great extent, the Government's concerns are not being backed up by a determination to retain control over our own economy. In June, the Treasury produced a paper called, "Policy frameworks in the UK and EMU"—economic and monetary union—which states:
	"While individual tax and spending policies remain a matter for EU Member States, there is an EU framework to promote and maintain sound public finances and to aid coordination between the fiscal authorities."
	It continues:
	"The main objective for fiscal policy which Member States have agreed . . . is to safeguard sound government finances as a means to strengthen the conditions for price stability"—
	that, of course, is what monetary union is all about—
	"and for strong sustainable growth conducive to employment creation."
	It then mentions the excessive deficit procedure, to which I was somewhat opposed in the Maastricht treaty, and the stability and growth pact, which was introduced in circumstances where I felt that it would have been wiser not to do so—many of us opposed it vigorously—and which has now collapsed in ignominy.
	It is worth pointing out that the same paper states:
	"As already noted, the UK and EU fiscal frameworks . . . even outside EMU"
	operate on the basis that
	"the UK is obliged to follow many of the requirements of the EU framework".
	We should reflect on that because although we are outside the single currency, we are not outside the framework in which the economic and monetary union policies operate. In considering the stability and growth pact and the exchange rate mechanism, which many of my distinguished colleagues, including some on the Front Bench, and I vigorously opposed, I was reminded of Shelley's famous poem, "Ozymandias":
	"Two vast and trunkless legs of stone
	Stand in the desert."
	It goes on to describe the pedestal:
	"these words appear:
	'My name is Ozymandias, King of Kings:
	Look on my works, ye Mighty, and despair!'
	Nothing beside remains. Round the decay
	Of that colossal wreck, boundless and bare
	The lone and level sands stretch far away."
	That is how I would summarise the policies of the European constitution in relation to our economic affairs and management.
	The draft European constitution threatens to tighten the noose of European economic management and would transform the European Community and European Union treaties into a free-standing constitution for Europe, adjudicated by what is effectively an EU supreme court. So much for the House's jurisdiction. It proposes easier censure of member states for failing to comply with EU economic policy and deficit guidelines by making such censure subject to the double majority system of qualified majority voting. It would remove the requirement of unanimity for the Council of Ministers to adopt economic measures to apply to member states. It would also confer on the Council of Ministers a mandate to lay down fresh detailed rules and definitions for the excessive deficit procedure protocol. That is all in addition to existing treaty provisions on economic policy co-ordination and so-called multilateral surveillance of member states as well as the notorious dead letter of the stability and growth pact.
	We are not considering only technicalities but jobs, public services, realistic growth and public expenditure levels. The stability and growth pact was never a workable instrument but its recent killing off by France and Germany has created a new crisis. The supposed solidarity of EMU has been exposed as a sham. France and Germany originally intended the proposals to contain the profligacy of, for example, Italy. However, by breaking the pact they have undermined the rule of law and they have done so with the disgraceful connivance of the British Government.
	The United Kingdom is complicit in the destruction of the stability and growth pact. With Sweden, it opposed the redrafting of article III-88(1) of the draft European constitution on the adoption of measures for the eurozone on economic policy co-ordination and excessive deficits.
	Increasing functions are being created for the European Union. As I pointed out to the co-ordinating strategic planner of the Commission in the Select Committee on European Scrutiny the other day, creating more functions leads to more costs and more requirements to pay them. The European constitution must then be re-examined and it states that the Union has to provide the means to support the objectives. The money will come from taxation. The European constitution will have an upward effect on our tax system.
	Let me deal with asymmetric socks—[Interruption.] Indeed, perhaps I should consider asymmetric red socks. I meant "shocks". The economists have warned about that for some time and now Ireland is experiencing rampant inflation, Germany, Italy and the Netherlands are in recession and Portugal is an economic disaster zone. The internal contradictions of EMU have their own dynamics. They create not diversity but chaos and we will be affected, whether we are in or out.
	Monetary union has managed to create the worst of all possible worlds for the eurozone: regional imbalances of inflation and deflation, at first a low and now a damagingly high exchange rate, low growth, high unemployment, treaty obligations broken in every direction, bitter recriminations and a shattered illusion of moral unity. What is proposed is more of the same, whereas we need a fundamental rethink about all this, not only in the United Kingdom but in the rest of the EU.
	The Union's plans for economic management are dirigiste—their approach is almost Soviet—and they are unrealistic and unworkable in a democracy because they bear no relation to what people want. But they will have massive effects on people's daily lives, and on regulation, competitiveness, productivity, the social market economy, levels of public expenditure, hospitals, schools, public services and unemployment, as I pointed out in the economic debate about Maastricht all those years ago.
	There is also the other requirement under the charter concerning the length of the hours that people work, which will have a tremendous impact on our hospitals, as we saw the other day. There is also the right to strike, which even a Labour Government have not introduced. Even if the UK never joins the euro, our export markets will be affected by it, and our domestic economy remains subject to economic and monetary union.
	This constitution must be rejected. There must be a far-reaching, fundamental renegotiation that addresses the reality, not the false vision of the Euro-eélite. Does the Chancellor of the Exchequer agree, and if not, why not?

Jim Cunningham: It is rather ironical that I follow the hon. Member for Stone (Mr. Cash), particularly considering what he has been saying about Europe and the constitution. We have to remind him that if he and the last Conservative Government had not signed up to Maastricht and the single market, perhaps some of the red tape that he has been referring to would not have appeared.
	Although we have not seen the details of the pensions Bill, which my hon. Friend the Member for Coventry, North-West (Mr. Robinson) mentioned earlier, I certainly welcome the proposals, particularly for the setting up of a pension protection fund. Any time my hon. Friend or I asked to see the Secretary of State for Work and Pensions about the problems that we were experiencing in Coventry with the final payment schemes of companies such as Massey Ferguson and, to a certain extent, Rolls-Royce, my right hon. Friend and other Front-Bench colleagues were always prepared to see us and to meet delegations. Although it may be a little premature to say so, we seem to be going in the right direction. However, we certainly need to know more about how the fund will work and what the levies will be.
	The other issue arising from occupational pensions and final payments funds is the fact that there should be more consultation, not only on the general nature of pension funds but in the particular case of an employer proposing to change a pension fund. At the moment there is no onus on employers to consult employees about any changes to the pension fund or about pension holidays. Anybody who knows anything about industry will remember that, from time to time, employers take pension holidays, and nobody can stop them. That creates considerable problems. We must remember that the previous Conservative Government did very little about such situations. In fact, they presided over one of the biggest scandals in history—the mis-selling of pensions. I do not have to go into the details of that for my colleagues; I am sure that we are all aware of that scandal.
	Turning to fair trade and third-world debt, I am particularly glad that the Chancellor is saying that, by about 2006, Britain's share of help for the third world will rise to about £4.9 billion. That is a step in the right direction, but there has always been a concern in the west midlands about the problems that manufacturing experiences from time to time. I mentioned the Massey Ferguson pension scheme. Massey Ferguson has pulled up stumps and left Coventry. When any manufacturing jobs are lost, that has a knock-on effect on the small producers who supply the spare parts.
	We recognise that the Government are trying to do a lot for manufacturing industry, but we must keep our eye on that area, especially in the west midlands, which has been considered the economic engine of the country.
	The shadow Chancellor opened the debate with his new attack machine. I was trying to work out what we should call it. Should it be called the Pol Pot machine or the year zero machine? My hon. Friend the Member for Coventry, North-West touched on that. The Tories have created an interesting machine, but we have one of our own. I am sure my hon. Friends remember the 17 per cent. VAT on fuel under the Tories. Despite the campaigns that were waged, the Conservative Government did not listen. We had a battle in the House on a Friday morning about winter fuel payments, and I am sure that my hon. Friends remember that. Under the Tories, there were record interest rates, negative equity, the mis-selling of pensions, record unemployment, and the Horizon project, which the Opposition do not want to talk about. When I was on the Select Committee on Trade and Industry, it conducted an investigation into the Horizon project, which cost £0.5 billion and was probably responsible for some of the problems that we now have with computer systems. The Tories spent about £30 million trying to put it right.

Roger Berry: indicated assent.

Jim Cunningham: My hon. Friend also took part in that inquiry. The Opposition talk about their attacking machine, but we have one as well.
	I shall be a little more positive now, as I have said enough about the record of the Opposition in government. I shall take a measured look at our record. We have low inflation—we have probably had the lowest inflationary period in our history, despite what the Opposition say. That gives people confidence in the economy and a security that they have never had before. Anyone who has worked in industry has been subjected to the stop-go policies of Conservative Governments, when they could be threatened with redundancy. They know what that security means to the man and woman in the street. That is fundamental to people outside, and we should never lose sight of it.
	More money is being spent on the health service and on education. More importantly, there has been an increase in the number of doctors and nurses to meet the needs of the health service. Much has been done to reduce waiting lists, but it is important to note that more people are being treated than ever before. I am sure that my hon. Friends remember the days when people were put on trolleys because they could not be given hospital beds, and when there was a record number of hospital closures. It is worth while reminding ourselves of the Tory record.
	One of the most fundamental measures that the Government introduced was the minimum wage. We can all debate the level of the minimum wage, but I remember the case of a lady in Coventry who was paid £1 an hour and was not told her employment rights. We had a long battle with the job centre to get some action taken against the company involved. There was quite a bit about that in the Daily Mirror, which ran a campaign on the minimum wage.
	We should again remember the Conservative Government's record. I like to jump in and out of this subject, just to remind them. What could have been worse than the poll tax? Need I say more? I was leader of Coventry city council during the poll tax years. People complain about high council tax charges, and some of them are too high, especially in Tory councils, but I can remember when Coventry city council's rate support grant was cut and its capital budget was capped. In effect, that meant that we could not carry out school or council house repairs. Therefore, although we have been in government for about six and a half years, we still have a long way to go to deal with the injustices and inequities of the Tories' 18 years in government.
	I say again that I welcome a number of measures in the Queen's Speech and a number of measures that the Chancellor has introduced in the past. I look forward to seeing the detail of the Government's pensions Bill.

Archie Norman: I draw the attention of the House to my entry in the Register of Members' Interests.
	It is a great pleasure to follow the hon. Member for Coventry, South (Mr. Cunningham), who made an interesting speech and some important points. I was sorry that he chose to introduce, perhaps uncharacteristically, a partisan note at the end of his remarks. It is interesting to note how often Labour Members refer to the poll tax, as if that is an important point about next year's public agenda. After all, the poll tax became extinct more than a decade ago. If that is the greatest criticism that they can level at Opposition policies, it is not very much.
	My right hon. Friend the Member for Charnwood (Mr. Dorrell) said that the debate would be interesting to the outside world only if we were capable of standing back a bit from party politics, and I agree. Unfortunately, he made his remark after the Chancellor left the Chamber. The Chancellor's speech was very much the speech of a politician, of someone more interested in his interpretation of Opposition policies than in any rounded assessment of the state of the economy.
	There are fundamental issues about the performance of the economy; I think that any rounded assessment would come to that conclusion. That is not necessarily a criticism of the Chancellor or of the Government's approach. The Government set out with a big project—to increase state spending on state-delivered service—in the belief that the quality of life for British people, our infrastructure, and hence our national competitiveness would improve as a result. That is a perfectly noble purpose, but the Government staked their reputation on their ability not to spend money but to deliver outcomes proportionate to the increase in spending.
	That is the issue that my right hon. Friend the shadow Chancellor raised in his speech. It is not a partisan point that there are serious problems with public service productivity and public service delivery. After all, it is an issue that the Prime Minister himself has recognised. Given the major policy shift undertaken by the Government, that is the central issue that we should be debating and that the Queen's Speech should be addressing.

Geoffrey Robinson: Will the hon. Gentleman give way?

Archie Norman: I am sorry. I am so short of time that I prefer not to, if the hon. Gentleman will forgive me.
	The shadow Chancellor said that the solution is not more legislation, it is better administration. He is 100 per cent. right. That goes not just for public services but for the economy as a whole. Let us remember that public spending is rising to 40 per cent. of GDP. It accounts directly for about one fifth of all employment and indirectly for even more, so it is a substantial part of the total. If we fail to deliver productivity growth in the public sector, it will be extremely difficult to improve the competitiveness of the economy overall, regardless of the state of the national infrastructure.
	It is not just a question of wastage, surplus overheads, the burgeoning number of administrators in the health service or the Department of Trade and Industry. The importance of the bureaucrats and administrators is that they speak of a set of values and a style of leadership. If in the DTI, the Department of Health or the Home Office the number of administrators is growing by the day, it is hardly surprising if people on the front line are not motivated to deliver improvement in performance and to look for ways of saving money.
	According the Office for National Statistics—these are not my statistics—from 1995 to 2003 there has been a 48 per cent. increase in public spending for a 15 per cent. increase in output. There is controversy about how we evaluate public sector output but, on any measure, we are looking at dire performance on productivity improvement compared with anything one would expect in the private sector. In the NHS alone, most measures suggest that for an increase of about 21 per cent. in spending over the last three years, we have had an increase in output of approximately 1 to 2 per cent. There may have been qualitative improvements beyond that, but there is a huge deficit in performance that would be unacceptable in any commercial environment.
	It is no defence for the Chancellor to give a great list of achievements; after spending that amount of money, there should be achievements. The question is whether those achievements are proportionate to the money that has been spent, and whether the public sector is improving the quality of delivery at the same rate as one would expect had the same amount of money been spent in any other sphere of life. According to the ONS, we have seen negative productivity growth in the public sector in the last three years. That is a serious problem for both sides of the House and for the economy as a whole.
	We are putting more and more money and employment—70,000 to 90,000 people a year—into the least productive, worst managed, most trade unionised and most sclerotic part of the economy, which spends the least on research and development of any single sector: the public sector. That is the difficulty with which we are struggling, and the Queen's Speech needs to address it.
	What is the Government's agenda when faced with this central and structural problem in their policy? The answer appears to be to produce more Soviet-style proliferation of public targets and to do nothing to address the problems of public sector management. The chairman of a well respected NHS trust told me a couple of weeks ago that the problem with the Government was that they thought not that the Soviet Union was wrong, but that it did not try hard enough. [Interruption.] Those are not my words. One might think that they are exaggerated or ridiculous, but that is what leading public servants are saying about the Government. People who work for the Government—not me—believe that that is the way the Government are working.
	The Centre for Policy Studies produced an excellent document recently called "Managing not to manage" and pointed out that the life expectancy of a chief executive of an NHS trust is now only 700 days. In other words, we are losing talent in the service because people are so fed up with the way they are managed and by the support they receive from the Government. A MORI survey last year said that two thirds of NHS chief executives were absolutely fed up with the number of targets that they were expected to pursue and felt that that cast doubt on their interest in continuing to serve in the national health service.
	These are serious issues and the situation will get worse unless we start to support more effective management and leadership in the public service. The position of the Conservative party is not a question as to whether we should be spending more on public services. It is about how that money is spent and whether we are spending it in such a way that the delivery produces a better quality of life, better outcomes and better customer service for the people of this country.
	To reinforce this point, there are aspects of the public services that are improving, and we can point to instances of remarkable improvement, restructuring and growth in productivity. One example is Ordnance Survey, an outstanding institution—potentially a world leader—that has transformed its business over the past two or three years. The British Library is another outstanding world resource by any standards, and it is now employing new technology to good effect. The Royal Mail, led by my former colleague Allan Leighton, is restructuring at a fantastic rate; that is, of course, controversial in some quarters, but it is undoubtedly delivering big productivity gains.
	Importantly, it is not just that these institutions are unusual, but that they are led in every case by high quality private sector leadership and people who have come in from outside. The institutions compete, and individuals can make a choice outside their circles; the public have a choice in terms of library services, Ordnance Survey or the Royal Mail, and there is an incentive to perform. The public also have an incentive to make the right choice. And of course, these are institutions that are comparatively immune to the day-to-day interference of politics and politicians. Political interference and targeting represent an absolute corrosion of public services. They detract from the esteem of those who work within them, and diminish the attraction for capable men and women of achievement from outside to come in and provide the management that those services deserve.
	The things that we should look for from the Queen's Speech in the year ahead are measures to distance the partisan political process from the delivery of public services, and to provide the capacity to attract and motivate men and women—

Madam Deputy Speaker: Order. The hon. Gentleman's time is up.

Piara S Khabra: I am pleased to have the opportunity to speak in today's debate on economic affairs, and I hope to raise a few useful and specific points with the Treasury team. Many of the proposals covered by the debate will not capture the same headlines or create the same controversy as top-up fees or Lords reform, but the issues that we are dealing with are fundamental to the health of the nation's economy, which in turn will affect our ability to invest in public services.
	I am pleased to see that the United Kingdom has held up well in the troubled economic waters of the past year or two. In a report last month, the Organisation for Economic Co-operation and Development noted that
	"the UK economy continues to exhibit greater resilience than most other OECD countries"
	and that
	"inflation and unemployment are internationally low".
	Despite the concerns expressed in the report about the widening public deficit, I am sure that the Chancellor will be able to show in next week's pre-Budget report that it remains fiscally on-track.
	The Chancellor has done an excellent job in difficult circumstances—perhaps the best in this country's history, and better than any of his predecessors. My constituents have not forgotten the days of high inflation, high interest rates and unemployment, and of bankruptcies and the repossession of properties: the boom and bust period of the previous Conservative Government. Indeed, I have seen the devastating effect that that period had on my constituents.
	A CBI statement issued last month pointed out that
	"business confidence has risen in every English region and in Wales over the last six months as the global economic recovery has taken hold"
	and that employment is expected to rise in every region. Yet to ensure the durability of this recovery, it is important that we address certain dangers, and for that reason I am pleased to see proposals in the companies Bill to tackle corporate governance issues. The problems at the Dutch retailer Royal Ahold earlier this year—the chief executive resigned after it was discovered that profits had been overstated by $500 million in the past two years—show that Europe is not immune to scandals such as that affecting America's Enron.
	If we are to ensure that investors can have confidence in doing business in the UK, and with UK firms, we must strengthen our system of governance, particularly the rules on accounting standards. This country already has a great deal to offer to businesses. Indeed, in a survey published in July, the Economist Intelligence Unit ranked the United Kingdom as the fourth best country in the world in which to do business. But if we are to keep that position, we need to maintain confidence in our systems. I therefore welcome the proposed companies Bill, which will tighten the regulation of auditing, increase the powers to investigate companies, and allow the Inland Revenue to pass on any information on suspect accounts that it discovers during its investigations. That is important for the growth of the economy and for people in general, and it will lend welcome clarity to require directors to state that they have not withheld any relevant information from the auditors.
	None the less, I hope that the Government will consider going a little further in some areas. Five years ago we had the big six accountancy firms; now we have the big four, and the vast majority of the world's largest firms are audited by one of those. It is therefore imperative that their accounting be beyond reproach, and that investors can trust the accounts presented to the public and to shareholders to be independent. I cannot help but feel that that independence is in danger of being compromised by allowing a firm auditing a client company to provide lucrative consulting and tax advice as well. That is a point for Treasury Ministers to note.
	It is too much to assume that auditing firms that receive large fees for their consulting work will not be at least a little swayed, and certainly tempted, in their less lucrative auditing roles too. Two possible solutions present themselves. One is to bar auditors from offering non-audit work. That would create a real barrier to conflict of interests, as opposed to the Chinese wall model, which seems to have been ineffective. The fact that the Government intend to require companies to publish full details of the non-audit services that they get from their auditors suggests that the potential for conflict is recognised. I feel that it would be best to remove the possibility altogether.
	Another idea would be mandatory rotation of auditors, perhaps every three years. That would encourage independence, as it would reduce the possibility of auditors and clients becoming too close. The knowledge that an auditor's work would be under scrutiny by one of its rivals every few years would surely encourage a higher standard of work, which is needed both for businesses and for the economy as a whole.
	Once any changes are put in place, we need to put trust in the new processes. It is true that some businesses have abused our trust, but excessive regulation will only stifle innovation and the necessary degree of risk taking that is part of a successful entrepreneurial culture. I am glad that the Queen's Speech offers us some clear guidelines without excessive regulation.
	I shall now touch briefly on other welcome measures on the agenda for the coming Session. I am pleased that provision is to be made for establishing community interest companies to promote social enterprises. These new entities should bring useful and desirable economic and social benefits for the United Kingdom, especially as they will be expected to produce annual reports on their efforts to meet social objectives.
	I shall now raise several other issues that are important to my constituency and me. I look forward to supporting the proposals in the pensions Bill, as my constituents have raised the issue of pensions reform with me. I have often lobbied the Chancellor on the subject, and I am sure that many of my constituents will be pleased with the plans for a pension protection fund and a pensions regulator. I also hope that the Government will continue to recognise the importance of small businesses, which are especially important in my constituency, and also vital to the economy.
	I wonder whether the Treasury has made any commitment to deal with the domicile rule, which has lost the Treasury many millions of pounds in potential revenue. I am sure that the Chancellor is also aware of the high level of consumer debt, which is potentially damaging to households and families. I hope that the Government will think about ways of discouraging the sometimes murky activities that snare people into a debt trap.
	Of course, for all the proposals outlined in the Queen's Speech, the devil will be in the detail. I believe that there is much potential and I hope that the House will come together on many of the issues raised in the debate today. A healthy economy is essential to the UK not for its own sake, but for what it allows us to do. It enables us to continue investing and makes it possible to meet our social obligations to the nation. These proposals should create the healthy conditions and good practices necessary—

Madam Deputy Speaker: Order. The hon. Gentleman's time is up.

Jonathan Djanogly: Thank you, Madam Deputy Speaker. As "Tail-end Charlie", I shall have to pick on only a few issues. One issue that has not been much mentioned today, but which must be debated, is the massive impact of regulation on businesses, particularly small businesses, in our country. There are 15 new regulations coming into force every day, which, according to the estimate of the British Chambers of Commerce, amounts to a cost hike of £20 billion a year on business. When I asked businesses in my constituency about that, 90 per cent. felt that the burden had increased under the Labour Government.
	The evolving picture for British manufacturing is not a pretty one. Productivity growth has halved since Labour came to power. Output was down by 4 per cent. last year—the biggest fall since 1991—and profitability has fallen to its lowest level since 1992 with 300 manufacturing jobs being lost every day. In such a dire position, we need to ask what the Government wanted to achieve. It is certainly not equality, because the divide between rich and poor is growing. Clearly, the Government believed that low interest rates would encourage investment, but while the personal debt mountain has grown to ever-higher levels, corporate investment has fallen in the last quarter to its lowest level for 20 years.
	I can only imagine that Europe must figure highly in Labour's grand plan—I have the inevitable feeling that they want to dumb down to the lowest level of the social chapter—and that the Government wish to appease the unions with a European social agenda that will lead to a less competitive and, ultimately, higher unemployment economy, which is more euro-compliant. Once comfortably in the euro, the Government will be able to blame others for setting an interest rate that destroys our own economy.
	Having said that, Labour has also encouraged our very own British regulations, such as the climate change levy, the aggregates tax and, most recently, the income tax hike in the form of national insurance, which is itself equivalent to a 3 per cent. rise in corporation tax but is wholly unrelated to such niceties as whether the company concerned makes a penny of profit. Worrying as the red tape and regulations are to business, the growing sentiment that I hear from businesses is that they feel increasingly isolated. While their employees' protections and rights are becoming ever more entrenched, who in the Government is standing up for business interests?
	The tide continues to flow in this year's Queen's Speech with a new draft disability discrimination Bill and Employment Relations Bill chipping away time and again at our competitiveness. It is a Government of technocrats and target setters, not innovators and leaders. Whenever there is a problem, they say, "Let's have another Bill", but before we move on to the new Bills, including the proposed Bill to regulate auditors and facilitate the raiding of companies and their directors by the Department of Trade and Industry, what about the comprehensive companies Bill that they have promised for five years—the one that will reduce form filling, ease statutory capital requirements for companies and remove the inherent discrimination that small companies face in our corporate legislation? I ask the Government, in whose in-tray is that now languishing?
	I recently met the British Exporters Association, which said that the relevant Minister did not seem much concerned about attending meetings with foreign parties to help companies to win contracts, though that was regularly done by other European Ministers. I return to the question whether it is worth having a Department of Trade and Industry at all. The answer is, probably not, when the Secretary of State prioritises commenting on semi-nude women sitting on cars in motor shows, attacks the ability of British managers rather than supports them, and highlights the question of ageism as a sop to pensioners who are now forced to work due to Labour having smashed their pensions.
	My opinion might be different if we had a Government who cut regulation for companies and fought Treasury plans to increase corporate taxes; who stood up for British interests abroad and demanded our fair share of Iraqi contracts; who travelled the world securing inward investment and British foreign infrastructure and export deals, and who sorted out rather than pandered to the unions and their ancient work practices, as we recently saw with the Post Office strikes. Only then might I give a cheer for the Department of Trade and Industry.

David Willetts: The Opposition believe in productivity and my hon. Friend the Member for Huntingdon (Mr. Djanogly) has just said in four minutes as much as most contributors to the debate said in 10 minutes. I congratulate him. I declare my interests, which appear in the Register.
	I begin by considering the historical context of the Queen's Speech. The Government have been in office for six and a half years. In that period, they have passed 254 Acts of Parliament, which amount to 16,050 pages. The Government began with 600 targets, but they needed improvement and development so we now have a total of 890. There has been a 50 per cent. increase in spending on public services.
	So if Utopia were achieved by legislation, targets and public spending we ought to be in it today: but we are not, and the reason for the growing discontent that is expressed on the Conservative Benches is that it is manifest that we are not. Several of my right hon. and hon. Friends, including my right hon. Friends the Members for North-West Cambridgeshire (Sir Brian Mawhinney) and for Charnwood (Mr. Dorrell) and my hon. Friend the Member for Tunbridge Wells (Mr. Norman), drew the House's attention to the problem that we are not producing enough, especially in the public sector where we need £4 of input for £1 of product. That is the kernel of the issue.
	The problem was put very well by the Public Administration Committee, which investigated targets. Its report stated:
	"we discovered that targets and results were different things."
	That will be the Government's epitaph; the discovery that targets and results are different things.
	Perhaps Ministers realise that there is a problem. That may be why we are having a big conversation—to find out what ought to be done—perhaps as a result of some loss of direction, some loss of confidence or some loss of momentum. For example, on the constitution, when the Prime Minister was in opposition he said that he supported Labour's commitment to replacing the House of Lords with an elected second Chamber. Yet now the big conversation consultation document asks what should be the role and functions of a second Chamber. It asks how today's House of Lords should be constituted.
	Six years ago, the Government knew how they were doing on transport. Their first annual report stated, "Done" in relation to the development of an integrated transport policy. However, in the big conversation, they say that more needs to be done and that they are asking the tough questions about how to fund a world-class transport infrastructure, how best to integrate transport and whether they have got their priorities right.
	The Government are losing their way. They are losing momentum and they have lost their purpose. The tragedy is that there ought to be a conversation and we know what it ought to be about. The big conversation ought to be about how we reform our public services. That is the real big conversation and I believe that it goes on among Ministers. We know what they say. We know what the Prime Minister has said. If Tony were free to put his entry on the website, this is what he would say:
	"We should be far more radical about the role of the state as regulator rather than provider, opening up healthcare, for example, to a mixed economy under the NHS umbrella . . . We should also stimulate new entrants to the schools market and"—
	I draw the Chancellor's attention to this point—
	"be willing to experiment with new forms of co-payment in the public sector."
	Perhaps the Chancellor would not agree.
	Someone close to the Chancellor also made a contribution to the big conversation. This is what Ed would like to put on the website,
	"We have to have the confidence to accept that there is a limit to how far you can apply market principles . . . you run grave risks with the ethic of public service . . . if you go down the road of thinking you can apply market principles to a good like health, the evidence is that you end up with inefficiency and escalating costs, two-tierism and you can do grave damage to that ethic of public service . . . I think the same is true of education."
	That is what Ed would put in the big conversation.

Eric Forth: That is Balls.

David Willetts: Perhaps, but this is how Tony chips in. He says:
	"But unless we want the result to be poorer services, we need to address the balance between what the citizen pays individually or collectively."
	That is the Prime Minister's contribution to the big conversation. The Chancellor comes in and warns:
	"The very same reasoning which leads us to the case for public funding of health care on efficiency as well as equity grounds also leads us to the case for public provision of healthcare."
	That is what the Chancellor thinks. In desperation, the Prime Minister comes back with his final throw.
	"We should have the confidence to open up the debate, be honest about the challenges, lay out the real choices."
	What are the No. 10 spin doctors saying, meanwhile? A senior Government official said:
	"We think these are issues that should be discussed in private and not in the columns of newspapers."
	That would be a big conversation, and it is the one we should be having. It is the one in which Opposition Members are taking part. It is a great pity that, when the debate gets to the heart of the nature of Britain's public services, all we hear from the Government are muffled thuds and sounds emerging from Nos. 10 and 11 Downing street. That is what has gone wrong.
	Pensions provide a particular example of where the Government have failed in target setting and control. The Government set a clear target, and the Opposition—in the bipartisan spirit in which we believe—said that we were happy to endorse it. The Government target was to shift the balance of pension funding: instead of pensioners getting 60 per cent. of their income from benefits and 40 per cent. from funded savings, the proportions were to be reversed. What has happened? In practice, the trend has gone in the opposite direction. When the Government came to office, pensioners got 51 per cent. of their income in benefits, and 42 per cent. in funded pension savings. Now they get 61 per cent. in benefits, and 39 per cent. in funded pension savings. The country is heading in the wrong direction.
	I remind the Chancellor of his famous promise to the Labour party conference:
	"I want the next Labour Government to achieve what in 50 years of the welfare state has never been achieved—the end of the means test for our elderly people."
	We would love to hear him endorse those sentiments again, at the Dispatch Box. Instead, what we have is more means testing. Help the Aged believes that the pension credit is "totally over-engineered" and that it should be much simpler and fairer. It also said that it would be
	"better to boost the basic state pension to Minimum Income Guarantee level, which could still be done with modest extra costs."
	That would be the right direction—reversing the spread of means testing and rewarding people for building up their funded pension savings. However, the Government are taking us in the wrong direction, which is the opposite of the one set out by the Chancellor in opposition.
	The Government are to introduce legislation to set up a pension protection fund. However, we know what pensions need protection from—the Chancellor who took £5 billion a year away from them. The Government say that they are bringing in the pension protection scheme to restore confidence in pensions. They certainly need to restore that confidence. A polling question asked:
	"How much do you trust the Government to keep its word and not let you down on your pension?"
	The responses showed that trust scored 16 per cent., while distrust scored 81 per cent.—a net score of minus 66 per cent. That shows that the Government have a problem. I hope that their legislation will do something about that.
	The trouble is that we are not clear about how the protection scheme will work, or whether it will offer any extra security, compared with existing pension schemes. It is not clear what will happen if the premiums are insufficient to bail out a large pension scheme. Of course, there is nothing in these measures for the people who have already lost their pension schemes—employees of companies such as Allied Steel and Wire. Nearly a year ago, on 17 January, I wrote to the Secretary of State promising that we would work on a cross-party basis to introduce straightforward, simple measures that would tackle the anomalies in the current rules on wind-ups, but our offer has been ignored. Those measures could be on the statute book by now. We do not need to wait any longer.
	The problem with the Government's approach is that it is defensive. They are building a deeper ditch around a castle. They are not offering anybody any incentive for more funded saving. That is what we in the Conservative party believe in.

Andrew Smith: At least until the last speech this was a good debate. We heard from 15 Back-Bench Members. I thank the right hon. Members for North-West Cambridgeshire (Sir Brian Mawhinney) and for Charnwood (Mr. Dorrell), the hon. Members for Banff and Buchan (Mr. Salmond), for Bournemouth, West (Mr. Butterfill), for Stone (Mr. Cash), for Tunbridge Wells (Mr. Norman), for Northavon (Mr. Webb) and for Huntingdon (Mr. Djanogly) for their contributions. Unlike the Conservative Front Bench, they at least were interested in debating the economy. I thank, too, my hon. Friends the Members for Ochil (Mr. O'Neill), for Coventry, North-West (Mr. Robinson), for Doncaster, North (Mr. Hughes) and for Kingswood (Mr. Berry), my right hon. Friends the Members for Llanelli (Denzil Davies) and for Coatbridge and Chryston (Mr. Clarke), and my hon. Friends the Members for Coventry, South (Mr. Cunningham) and for Ealing, Southall (Mr. Khabra) for their contributions.
	The debate has ranged so widely that it is difficult to do justice in the nine remaining minutes to all the interesting arguments. I will pick out a number of points for response. First, I assure the hon. Member for Northavon, who made important points about the Child Support Agency, that a lump sum child support payment such as he described would be assigned to the time that it should have been paid and disregarded accordingly, so that in the example that he gave the full £520 would be disregarded retrospectively across the year.
	The debate opened with the first speech of the right hon. Member for West Dorset (Mr. Letwin) as shadow Chancellor and his inaugural mauling at the hands of my right hon. Friend the Chancellor of the Exchequer. I congratulate the right hon. Gentleman on his appointment. He has the endearing characteristic of saying out loud what is in his mind, so we often get a more honest account for what passes for Conservative policy from him than we do from his colleagues. From a sedentary position a few moments ago, he committed the Conservative party to reintroducing the dividend tax credit at a cost of £5 billion—[Interruption.] He wants to resile from it now. In the limited time available I was not going to go into his record as a self-proclaimed inventor of the poll tax, an enthusiast for NHS vouchers and the proposer of £20 billion of cuts in public spending. From his speech this afternoon and that of the hon. Member for Havant (Mr. Willetts), it is clear that the Opposition have no coherent critique of this legislative programme, never mind any coherent alternative.
	The Opposition spoke a lot about targets. They made it clear that they have a target to get public spending down to 35 per cent. of GDP with £80 billion of cuts, privatisation in the NHS and the abolition of the new deal. Where this Government are making tough choices for stability and progress, the Opposition Front Bench propose extreme and muddled policies that would damage schools, hospitals and universities, abolish the new deal, drive up unemployment and threaten Britain's hard-won economic stability.
	The Opposition have not understood that our record on economic stability is the product of choices that we made and they opposed. They opposed the symmetrical inflation target and Bank of England independence. They rubbished tough fiscal rules and would abolish the new deal. Those tough choices and our investment in Britain's future have helped the Government to deliver the lowest unemployment rates for a generation as well as record numbers of people in jobs.
	To pick up the point made by the hon. Member for Huntingdon, twice as many jobs have been created in the private sector as in the public sector, although the Government make no apology for the thousands of extra nurses, doctors and teachers that there now are. That is a sharp contrast with the period when the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) was responsible for employment policy, when unemployment rose by more than 1 million and 1,300 people were consigned to the dole queues every day.
	My hon. Friend the Member for Ochil brought particular passion to the debate when he explained how our investment in the new deal has rescued lives and revived communities. By their plan to scrap that successful programme and by their response to the Queen's Speech, Opposition Members remind the country why, just as they could not be trusted in the past, they cannot now be trusted with Britain's future.
	My hon. Friend the Member for Coventry, North-West and a number of other hon. Members on both sides of the House welcomed our proposed legislation on pensions. I heard with interest the comments made by the right hon. Member for North-West Cambridgeshire and the detailed remarks made by the hon. Member for Bournemouth, West. I hope that their support for the principle of the pensions Bill will be shared by those on the Conservative Front Bench. The pensions Bill will strengthen partnership in pensions, set up a pension protection fund, make it easier for companies to run schemes, extend TUPE protection and give people a better deal when they choose to defer taking their state pensions.
	Conservative Front Benchers might also reflect on the fact that, whereas our pensions Bill will extend pension security and retirement choice for the future, the Conservative party's proposals would scrap the state second pension, taking additional entitlements away from 20 million low earners, disabled people and carers—most of them women. A number of Conservative Members have spoken about mass means-testing. Let us be clear that what they really object to is the money—to date, £47 a week on average—that Labour is now getting to millions of pensioners through the pension credit, for the first time rewarding saving, not penalising it.
	This week, the shadow Chancellor described the Conservative pensions policy as much misunderstood. Whose fault is that, I wonder? Could it be because the earnings link that the Conservatives propose has been described as a bogus promise, as
	"seductive politics, but dangerous economics",—[Official Report, 8 July 1993; Vol. 228, c. 516.]
	and as
	"a wild and uncosted policy"—[Official Report, 8 June 2000; Vol. 351, c. 440.]
	Those are not my words, but those of the hon. Member for Havant, when others proposed the very policy that he now has to defend. As the Leader of the Opposition admitted, not only does that policy not help the poor, but whereas our plans are fiscally sustainable, their sums simply do not add up. Again, the right hon. Member for West Dorset, who is wildly gesticulating at the moment, let the cat out of the bag when he said:
	"we may have to make some further painful decisions"
	to pay for the policy. He owes it to the country to tell us what those cuts would be.
	In the limited time remaining, let me welcome the excellent speech by my hon. Friend the Member for Kingswood. I thank him for welcoming the draft Disability Discrimination Bill, and I pay tribute to all his years of campaigning and to all those in the disabled people's movement who have helped us to make such progress. The draft Bill will be subject to scrutiny, and there will be an opportunity to examine all the issues that he raised.
	In conclusion, this is a legislative programme that faces the challenges of the future. Just as we have built economic stability by taking tough choices and sticking to them, so we will, with this programme, extend protection and chances in life for children, reform higher education, extend pension security and bring integrity to the asylum system. The measures advance progress, fairness and a strong economy, and I commend them to the House.

Question put, That the amendment be made:—
	The House divided: Ayes 171, Noes 286.

Question accordingly negatived.
	Amendment proposed, at the end of the Question, to add:
	'But humbly regret that the Gracious Speech distracts from sound policies which deal with crime and its causes; further regret the intention to introduce top-up fees for universities; further regret the lack of provision for free personal care for the elderly and disabled people and the failure to tackle the pension crisis; further regret the decision to proceed with an ill-thought through and expensive identity cards scheme; further regret that the Government has chosen to undermine further the rights of people fleeing persecution to seek asylum in this country; note that the Government has failed to put environment at the heart of its legislative agenda and address the crisis in the transport system; regret the failure to introduce single transferable vote as the voting system for the Scottish Parliament; and further regret the absence of measures to tackle the steep inequalities which continue to afflict the most disadvantaged members of society.'.—[Mr. Stunell.]
	Question put forthwith, pursuant to Standing Order No. 33 (Calling of amendments at end of debate), That the amendment be made:—
	The House divided: Ayes 44, Noes 277.

Question accordingly negatived.
	Main Question put:—
	The House divided: Ayes 275, Noes 174.

Question accordingly agreed to.
	Resolved,
	That an humble Address be presented to Her Majesty, as follows:
	Most Gracious Sovereign,
	We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
	To be presented by Privy Councillors or Members of Her Majesty's Household.

ADJOURNMENT (CHRISTMAS)

Motion made, and Question put forthwith, pursuant to Standing Order No. 25 (Periodic Adjournments),
	That this House, at its rising on Thursday 18th December, do adjourn till Monday 5th January 2004.—[Paul Clark.]
	Question agreed to.

HEMEL HEMPSTEAD HOSPITAL

Motion made, and Question proposed, That this House do now adjourn.—[Paul Clark.]

Tony McWalter: I have only one theme under the debate title of "Hemel Hempstead Hospital". I want the Minister to require some sums to be done by the Bedfordshire and Hertfordshire strategic health authority. It has refused to do any sums and in my view it threatens health services in its area with a huge debt for the next four decades.
	I thank the Dacorum hospital action group, which is in no less than its 29th year of campaigning on the matter. During my seven years as an MP, I have delivered 88,000 signatures to Health Ministers, to Downing street and to others in defence of Hemel Hempstead hospital, yet there is still a strong sense that a desperately bad, wasteful and what I call nugatory decision is about to be taken. By that I mean that the decision will not benefit Hertfordshire and will not lead to the dispersion of services.
	The context of the debate is the desperately bad state of the Hertfordshire acute health system. I have called it a black hole because it is the only population of 1 million that I have been able to find that has no tertiary acute services to support it. There are four acute hospitals, of which three are in a state of acute decay. It is estimated that it will cost £90 million to repair Princess Alexandra tower at Watford, and £90 million to repair the main tower at the Queen Elizabeth II hospital in Welwyn Garden City. There has been a quotation of £50 million for the Lister hospital in Stevenage. Only Hemel Hempstead hospital is in a passable condition and that follows the closure of St. Albans acute services in the early 1990s.
	The desperate condition of the service is reflected in the desperate condition of mental health services, with four large mental health hospitals closed during the Thatcher era. Our system has operated at a chronic loss for decades, so every time we need anything done, people say, "Sorry, we cannot do it. There's no money." The system has been divisive; those in Hertfordshire who are wealthy can go to London, but the poorer get treated in second-rate hospitals that cannot give the full range of services in Hertfordshire.
	That could change. The Government have offered a way forward, with funding that will make the system free of debt and with some tertiary acute services provided locally. The Varley report on cancer said that there should be a location of such services in Hertfordshire and the Government have indicated that they are prepared to finance that move. That is fantastically good news for Hertfordshire and I thank the Minister and his Department for the response that they have made to the recommendations in that report.
	For three decades, there has been a desire for two things from the administrators of health in Hertfordshire. First, there is a desire for what is called a super-hospital—a single hospital with acute services, governing the whole population of Hertfordshire. That is a stupid suggestion because Hertfordshire is a series of relatively small market towns with relatively poor transport links between the various bits of the county. We need a distributed hospital system, not a concentrated one. With those suggestions, there has always been a suggestion of marginalising Hemel Hempstead hospital, despite the fact that it is in the most populated part of the county and, indeed, the eastern region.
	We had a review recently. Those involved called it a consultation; we called it an absolute stitch-up. There were two options in the consultation but both involved significant service closures at two of our four hospitals. The first option was to prefer Hemel Hempstead hospital and Stevenage but to shut trauma facilities at Welwyn Garden City and Watford; there was a tick for Hemel and Stevenage under that option. The other option was to close trauma facilities at Hemel and Stevenage and improve them at Watford, while inaugurating a new hospital in Hatfield after shutting down the mouldering Welwyn Garden City hospital. There is a strong demand in most communities for new hospitals and mine is no exception, so option two—the new hospital in Hatfield—was favoured.
	The costs were never properly examined, despite a claim by my hon. Friend the Member for St. Albans (Mr. Pollard) at a recent meeting that all the sums had been done. I speak as a mathematics graduate and say that none of the sums has been done. Throughout the consultation, there was a strong feeling that an agreement for a £500 million private finance initiative could be gained from the Government, so a new hospital at Hatfield and the demolition of the present hospital at Welwyn Garden City were given active consideration. While we are about it, it was thought, why not bung the new cancer centre in Hatfield, even though it is not even in the current Mount Vernon cancer network area? Why not, by the way, also develop a new medical school—but that was not factored in. That was the strong feeling in the community.
	The deadline for the end of the consultation was early September, but it became clear at the beginning of August—when I made a 20-page submission to the strategic health authority—that although we heard that trauma facilities at Hatfield and Watford were to be developed, only £27 million had been allocated to Watford for improvements. That would not even repair the plumbing. Watford is in as dreadful a state as the Queen Elizabeth II hospital in Welwyn, which the strategic health authority proposed to demolish.
	On 28 August, a mere five days before the consultation was due to end, it was realised that if that part of the plan was kept to, Watford would pull out, recognising that it, too, was going to lose its facilities in a major way. On that day, a document—a "clarification"—was issued, which I have before me. It strengthened option 2 by what I can only describe as fairy godmother economics: let money pour out of the sky, and as a result not only build a £500 million hospital in Hatfield but, it seemed to suggest, provide a similarly scaled scheme at Watford. Incidentally, the Hatfield initiative would be the largest health private finance initiative ever, overtaking the University College hospital, which cost £422 million. But the Watford scheme was never costed or admitted to; mutterings were simply made to the effect that "whatever it took" would be provided.
	I have since found out in a recent meeting with the chair of the West Herts Hospitals NHS trust that every single building at Watford may well have to be demolished and replaced. Thus we have not just a massive, £500 million project, which is what the consultation was said to be about, but a project twice that scale, involving demolishing and replacing two hospitals. We have not a £500 million project for two new trauma centres, but a £1 billion project for two new hospitals in Hertfordshire. That is the current suggestion of the strategic health authority.
	I am afraid to say that in my view, the strategic health authority has severely misled the public. It released the figures on Watford only after I made my submission, in which I pointed out that its plans were incompetent. All that it did was simply to adopt the fairy godmother option: spend, spend, spend, regardless of the constraints that any responsible Government body should have. That is why I ask that the sums be done.
	I do not actually believe that the result of those activities will be a series of new super-hospitals. The strategic health authority's plans are so absurd, costly and damaging that the laudable plan of addressing the problems of the Hertfordshire NHS by developing new tertiary services, along the lines of the Varley report, will be lost as well.
	Everyone is in favour of fairy godmother economics—if they are to receive benefits. At a recent vote, the strategic health authority approved this wonderful plan by 10 votes to one. Personally, I would not have voted for either of its rotten options. Option 1, which people said would benefit Hemel hospital, was based on a wonderful premise that most did not spot. The strategic health authority arrived at the idea that the options would not be that different in cost. How could it have done so, given that the only hospital in Hertfordshire with a decent estate is Hemel? Everyone admits that it is in much better condition than the other three hospitals. The strategic health authority said, "Actually, putting the cancer centre at Hemel hospital, which everyone agrees is decidedly possible, will cost £95 million." That is not exactly chicken-feed, bearing in mind that Dartford hospital cost £94 million. We were pleased that that was possible, but the strategic health authority said, "If we're going to put the centre there, you've got to knock down the rest of the hospital, leaving only the Verulam wing standing."
	What a pernicious, even vicious, premise on which to base a consultation! We repudiate and reject the idea that a hospital that has recently been given £4.2 million of investment—including a superb new facility that allows excellent communication between accident and emergency and the fracture clinic, and a new magnetic resonance imaging scanner—should be knocked down, just so that the strategic health authority can make it seem as though it is faced with two options of similar cost.
	Hemel Hempstead happens to be at the geographical centre of the Mount Vernon cancer network area. The new cancer centre could be developed on the so-called Paradise site, which is in public ownership—it is owned by English Partnerships—and can be offered to the NHS as a massive development site, at agricultural prices, in a town centre in Hertfordshire. What a phenomenal boon that would be to the NHS budget. I have arranged that deal myself, so I know that it is binding on English Partnerships, which has development land elsewhere in exchange.
	Dacorum council also wants hospital consolidation, and has offered an additional site for accommodation for nurses and other hospital staff. Hemel Hempstead hospital has the capacity to quadruple its present size and still have adequate facilities for a whole range of developments. It also has wonderful access to the M1, the M25 and the A41, and, because it is in a town centre, fantastically good bus links with a wide variety of locations, many of which are a long way from Hertfordshire.
	For £200 million, the whole Hertfordshire hospital system could be revivified, and most of the remaining £105 million could be spent not at Hemel Hempstead hospital, which does not need that much, but in the rest of the system, which is crumbling, derelict in places and desperately neglected. We might then be able to negate the accurate perception that Hertfordshire is not in the forefront of NHS acute services development.
	I do not expect the Minister to announce now that he is in favour of one way of improving the health service in Hertfordshire rather than another. I have known him too well and for too long to think that such an answer would be forthcoming. All I want him to do is to ensure that the sums are done, because we are talking about the difference between £1 billion and £200 million. It will be a scandal if people get away with knocking down new productive NHS plant and putting the same facilities up elsewhere, at massive cost to the taxpayer and the NHS.
	I ask the Minister to direct that any business plan for the development of acute services in Hertfordshire carefully considers the prospect of improving services by developing the cancer centre at Hemel Hempstead, which is in the middle of the cancer network area. The taxpayers of Hertfordshire support the Government's plans to improve the NHS in the county, but they do not want their system saddled with chronic debt for the next 40 years, and they want some resources left for primary care and mental health. Any numerate person must know how absurd are the ill-considered, late breaking, support-brokering plans of the Bedfordshire and Hertfordshire strategic health authority.

Stephen Ladyman: I congratulate my hon. Friend the Member for Hemel Hempstead (Mr. McWalter) on securing this Adjournment debate. He is a doughty fighter for his constituents; he has been fighting this battle for some time with vigour and determination, and I suspect that whatever I say tonight will not change that by one iota. He will continue to fight for his constituents, and they should be proud of him and grateful to him for his efforts on their behalf.
	In case I run out of time at the end of the debate, I shall start by saying that my hon. Friend is right: Ministers do not use Adjournment debates to change local health policies. Local health priorities and the planning of local health services have been devolved to local areas, under our plans to shift the balance of power away from Whitehall, so I am not in any position to direct in one way or the other. Until such time as certain criteria are met and the Department of Health is asked to intervene, I have no powers to order any such things. What I can do is ensure that my hon. Friend's words are read carefully by those who are in a position to take a decision in Bedfordshire and Hertfordshire, that they reflect on them, and that they take account of his views. I shall certainly do that.
	I can give my hon. Friend a further reassurance that the next stage of the process is to produce business plans, which will be worked up for both options. It is not true to say that they will both be worked up in the same detail, but they will both be worked further to a certain point. A decision will then be taken and the preferred option will be worked up in even greater detail. I can assure my hon. Friend that his concerns about the sums adding up and the relative costs of the proposals will be aired during that process, so he will continue to have opportunities to express his views if his constituents are still dissatisfied by the decisions.
	I shall say more about the local decisions in a few moments, but it is important to state for the record that the NHS cannot stand still. It has to change if we are to improve it. The health care system is under pressure. Patients are still waiting too long for their operations—despite the dramatic fall in waiting times that has been announced this week, which is surely welcomed by everyone—and many hospitals are still in a poor state and need updating. We also need to recruit and retain more doctors and nurses. We have not only to increase capacity, but to raise clinical standards generally. It is not just more of the same that we need in the health service, but a radical re-look at how services are provided.
	The NHS plan set out a challenging 10-year programme for NHS reform. Far-reaching changes are often necessary to provide the best possible services for patients. We must ensure that services are accessible and flexible, and we want to design services around the needs of patients. As part of the modernisation programme, many NHS economies and organisations are considering, with their local stakeholders, changes to the way in which they organise their services. I believe that we all recognise that hospital services need to change if we are to continue to fulfil patients' needs and improve access.
	Services cannot remain static for ever, but have to be responsive to local needs and changing clinical practice. There are, of course, several different pressures on the service, and providers of health services have a responsibility to live within their means. Those issues and many others need to be taken into consideration in planning changes to services.
	As I said earlier, it is our policy, within the framework set out in the NHS plan and the "Shifting the Balance of Power within the NHS" initiative, to devolve funding decisions to the front line. It is now for primary care trusts, in partnership with strategic health authorities and other local stakeholders, to determine how best to use their funds to meet national and local priorities for improving health, tackling health inequalities and modernising services. They are in the best position to do that because of the specialist knowledge they have of the local community. That is why Ministers no longer have the power to direct local services in quite the way that my hon. Friend requested of me at the end of his speech.
	I believe that my hon. Friend will agree that within Bedfordshire and Hertfordshire, some health services—particularly the major hospitals in Hertfordshire: the Watford, Hemel Hempstead, Lister and Queen Elizabeth II hospitals—do not represent the standard of care and treatment that we expect to see in the 21st century. Indeed, I recently visited the four acute trusts in Bedfordshire and Hertfordshire and saw for myself the services and fabric of those environments. That is why the NHS in Bedfordshire and Hertfordshire undertook an extremely comprehensive and far-reaching consultation—a two-year process, reviewing a number of services and taking into account future trends in health care, national policy and best practice from around the country.
	The formal document "Investing in Your Health" and its associated consultation ran from 3 March to 1 September 2003, having been extended to allow for a parallel consultation on cancer services in north London, run by the North-West London strategic health authority.
	During the consultation period two options for the future reconfiguration of hospital services were proposed; both entailed retaining six major hospitals in Bedfordshire and Hertfordshire, including Hemel Hempstead and Watford general hospitals. Under option 1, Hemel Hempstead would be a major acute hospital caring for people requiring emergency treatment. Under option 2, Hemel Hempstead would treat out-patients and people requiring planned operations and medical procedures, although accident and emergency services would still be retained.
	The overwhelming preference after the consultation process was for option 2, which proposes developing five of the existing hospitals in Bedfordshire and Hertfordshire and building a new state-of-the-art hospital in Hatfield to replace the Queen Elizabeth II hospital in Welwyn Garden City and provide a new cancer centre. I assure my hon. Friend that I have been given an assurance that "Investing in Your Health" went through two scrutiny processes locally, both of which confirmed that people are happy with the process and the outcome. In addition, a joint scrutiny process followed in relation to cancer services specifically. It is expected that the final meeting will take place this month.
	I am aware that option 2 was not the option of choice for my hon. Friend and his constituents, but I am sure he will agree that the important thing is to focus on health outcomes for everybody. The proposed new model of care will mean more resources going towards caring for people closer to home and in community settings. A cancer centre will be located in Bedfordshire and Hertfordshire so that patients do not have to travel outside the two counties for treatment. The quality of health care will be improved by allowing hospitals to specialise in certain fields of medicine to create local centres of excellence, and by moving planned surgery to dedicated "surgicentres".
	I assure my hon. Friend that if, at the end of the process, option 2 is confirmed as a way forward, Hemel Hempstead hospital will continue to have a future. I am informed that it will receive capital investment of about £25 million for its development into a modern, high-quality, major hospital, specialising in planned surgery. Indeed, when I visited the hospital in October I saw for myself where some investment has already been delivered; for example, there is state-of-the-art magnetic resonance imaging, and a fracture clinic and dermatology treatment centre opened their doors to patients at Hemel Hempstead general hospital in March. That investment in new clinics means that patients and staff have a new treatment area. The final phase of the project, the construction of a new X-ray reception area, opened at the end of July. The Hemel birth centre opened on 31 March. It is a self-contained unit run by midwives, offering a supportive, "home from home" environment in which mothers can give birth.
	I can also reassure my hon. Friend that under the proposed option 2, the hospital's accident and emergency department would remain open, although patients with serious or life-threatening conditions would be taken to larger trauma centres at Watford, Luton or Dunstable hospitals.
	My hon. Friend has expressed concerns about the cost of option 2, but I am assured that the health authority employed a firm of consultants who carried out an assessment of the financial implications of the overall affordability of the proposal for the health care system of Bedfordshire and Hertfordshire. That report, which is in the public domain, demonstrated that from projected total revenue in excess of £2 billion, the cost differential between the two options was about £10 million, or about 0.5 per cent. It also means that under option 2 more patients will be treated locally rather than large numbers of patients having to travel outside their health area.
	I share my hon. Friend's concerns about access to the hospital, but I understand that English Partnerships is working with West Hertfordshire Hospitals NHS trust to develop a comprehensive development strategy that could deliver about 130 key-worker homes on land adjoining Hemel Hempstead hospital.
	As I mentioned earlier, it is our policy that primary care trusts, in partnership with other local NHS trusts and the strategic health authority, decide the priorities for the NHS locally. That is where specific local knowledge and expertise lies, and it is not appropriate for Ministers to decide on the direction of travel or how services should be configured—we have made that clear. It is right that the local NHS should do that.
	There is still a great deal of work to be done on the development of business cases and plans before the Secretary of State gives his final seal of approval. The next stage involves producing a more detailed analysis of the proposals. A strategic outline case must be written and it must meet four criteria before it can be approved. The plans must be affordable, achievable and accessible, with proper human resources.
	I hope that my hon. Friend the Member for Hemel Hempstead will understand that it would not be appropriate for me to comment further on this matter in case, following the local process, that would pre-empt any future ministerial decision that may be necessary. However, I assure him that the Department, and Ministers, will continue to work with the local NHS to review the progress of the local economy, and to ensure that the difficulties that are faced remain manageable.
	I hope, therefore, that my hon. Friend the Member for Hemel Hempstead, who introduced this important debate and who continues to work with the local NHS to build a better future for the residents in the area, will accept my assurance that the sums that he said were needed will be provided. The process will continue, and I know that local health managers will welcome further discussions with him and his constituents. Some people in the local health economy may still have to face difficult decisions, but I hope that we can all agree that what will emerge from the discussions and the change of configuration will be better for everyone, and better for the health of all the people living in Bedfordshire and Hertfordshire.
	Question put and agreed to.
	Adjourned accordingly at five minutes past Seven o'clock.